Crain's Cleveland Business

but the transaction could include a lucrative long-term deal for the Indians’ broadcast rights.

Derek Baine, an analyst at SNLKagan, a Monterey, Calif.-basedmedia consultancy, estimated STOcould be worth $350 million in asale.

A long-term broadcast rights dealalso could double the Indians’ tele-vision income, currently estimatedat $30 million a year.

Through a spokesperson, FoxSports declined comment. It is notclear whether Fox Sports wouldconsolidate operations of STO withits Fox Sports Ohio, which is basedin Broadview Heights. It operatestwo channels in some markets.

$2.00/DECEMBER 3 - 9, 2012

Entire contents © 2012 by Crain Communications Inc.

Vol. 33, No. 47

07447083781

747 SPECIAL SECTION

PHILANTHROPYEspecially at the holidays, companies struggle todecide to which nonprofits they’ll give ■■ Page 13PLUS: NONPROFITS WARM TO TECHNOLOGY ■■ & MORE

NEW

SPAP

ER

MAC makes football progress

But it’s expensive, making theprospect of Kent State keeping rising coach Darrell Hazell (right) adicey proposition. PAGE 3

PLUS:■ Timken Co. considers, but decides against, advice

to sell off its steel business, but still could be forced todo so by a shareholder vote. PAGE 3

INSIDE

STO sale could be next in TV’s wild westMarket for sports grows riper, and Dolans may be ready to deal INSIDE: A look at how the value of

local MLB television deals have sky-rocketed in value recently. Page 19

By JAY [email protected]

The Dolan family may be close toselling all or part of its SportsTimeOhio cable channel to Fox SportsMedia Group, as Fox builds its stableof regional sports networks andconsolidates plans for a national

cable sports network to rival industrygiant ESPN.

A source familiar with the Cleve-land sports cable market told Crain’sCleveland Business the two organi-zations are in serious talks about a sale of STO. Rhode Island-basedsports media reporter Ken Fang, whocontributes to the online Sports

Media Journal and blogs at www.fangsbites.com, said he, too, ishearing that a deal is in the works.

A sale could be a boon for theDolan-owned Cleveland Indiansbaseball team. Not only would theDolan family profit from the sale of the cable channel it built fromthe ground up beginning in 2006,

Ad buyers slowlysee importanceof daily PD waneReaders have rallied as assumed reduction in print schedule nearsBy JAY [email protected]

While editorial employees at The Plain Dealer arebuoyed by the thousands of readers who have jumpedon the bandwagon to save seven-day-a-week publica-tion of Cleveland’s only general circulation newspaper,they should be concerned that one key segment of thecommunity — advertisers and advertising agencies —are not enthusiastically on board.

Though most of the ad business professionals con-tacted by Crain’s Cleveland Business personally wouldmiss reading the PD over breakfast every morning, pro-fessionally they realize they don’t need a mass circula-tion print vehicle seven days a week to reach their keyaudiences.

And that assessment, more than reader response, iswhat makes it increasingly likely that, sometime afterJan. 31 of next year, Advance Publications Inc., the pri-vately held company that owns the daily paper, will trimup to four days from the PD’s weekly publishing schedule.

See ADS Page 8

See DREAM Page 19

See STO Page 19

AEROSPACESUPPLIERS’

DREAMS COME TRUE

MARC GOLUB

Parker Aerospace’s Brandon Rollins fits a hose on a fuel nozzle used in an engine for the Boeing 787 Dreamliner.

Area companies see robust activityfrom new Boeing plane’s popularity

By GINGER [email protected]

When it comes to Boeing Co.’s new 787 aircraft — the Dreamliner — man-ufacturers in Northeast Ohio are onboard.

Local manufacturers are responsible for partsranging from engine fuel pumps to forgings on theplane. And, with 844 Dreamliners on order — and38 already delivered — there’s a lot of work forcompanies in Northeast Ohio that help makethose planes come together.

Ohio doesn’t perform final assembly on theDreamliner, which had its first U.S. flight in No-vember. However, the state does provide Boeingwith more suppliers for its commercial aircraftthan any other in the country, with many of those

20121203-NEWS--1-NAT-CCI-CL_-- 11/30/2012 2:08 PM Page 1

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22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM DECEMBER 3 - 9, 2012

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COMING NEXT WEEK

Some Northeast Ohioartists are making a businessout of teaching others theircrafts. We talk with a few tofind out why they decided to get into the realm of education, whether thoseclasses have benefited theirbusinesses and whether interest is high in those offerings.

Plus, our monthly Tax Tipscolumn and more.

Small business

Audit Bureauof Circulation

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ONE DIRECTION — UPFrom 1979 to 2011, the earnings gap between women and men narrowed formost age groups — quite substantially in some cases, according to new federaldata. For instance, the women’s-to-men’s earnings ratio among 25- to 34-year-olds hit more than 92% in 2011 from less than 68% in 1979, while the ratio for45- to 54-year-olds increased to 76% from less than 57%. At each level of edu-cation, the U.S. Bureau of Labor Statistics notes, “women aged 25 years andolder have fared better than men with respect to long-term earnings growth,”even though they still trail men in current earnings. A breakdown of the data:

Women’s media weekly earnings as a percent of men’s, 1979-2011

Year

2011 82.2% 92.3% 78.5% 76.0% 75.1% 80.9%

2009 80.2 88.7 77.4 73.6 75.3 76.1

1999 76.5 81.5 71.7 70.0 67.9 78.7

1989 70.1 78.3 68.3 62.7 63.9 74.3

1979 62.3 67.5 58.3 56.8 60.6 77.6

In the Nov. 19, Forty Under40 profile of Mary Marita, Margaret Wagner Apartmentsin Cleveland Heights should havebeen identified as housing for low-income seniors rather than asan assisted-living complex.


KENT AS A CASE STUDY:CAN IT KEEP HAZELL?

the new growth.“We’re probably talking to literally

every major food and beverage com-pany in the United States,” presidentand CEO Andrew Lefkowitz said.

DECEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“There is a rush tolock up sports rightsfor the long term. … It shows a level of almost panic that (anetwork fears it) willbe stuck without ateam.”— Derek Baine, an analyst at SNLKagan, a Monterey, Calif.-basedmedia consultancy. Page One

“I don’t believe youcan arbitrarily give toany organization thatasks. You make themost impact with theones you are passion-ate about.”— Marlene Herman, owner andpresident of Aamco Transmission& Total Car Care in Clevelandand Cleveland Heights. Page 13

“If we don’t impactthe educational attainment of kids inour urban environ-ments, they don’t havea chance.”— Rich Frank, CEO, Guidestone.Page 17

“Retailers are absolutelydying to get into outletcenters. Their strategyis to have a bricks-and-mortar locationin a mall, to sell overthe Internet and to bein an outlet center.”— Richard Moore, a Solon-basedrealty expert at RBC Capital Markets. Page 6

Good bacteria good to Ganeden as licensing revenues mountMayfield Heights tech firm opens new lab to accommodate ‘lots and lots’ of products ready for marketBy CHUCK [email protected]

Like a hearty strain of bacteria ina huge Petri dish, Ganeden BiotechInc.’s revenue rapidly is replicating.

Every year since 2008, the May-field Heights company has roughlydoubled the amount of revenue itbrings in by licensing out “goodbacteria” used as an additive infood and other products.

Ganeden is taking steps to helpthat growth continue: Each month

through the end of this comingsummer, the company’s customersare scheduled to launch two tothree products that use its patentedprobiotic bacteria. By the end of2013, Ganeden’s bacteria should bein more than 100 products, up fromabout 60 today, said Michael Bush,vice president of business develop-ment for Ganeden.

The increase in licensing businessis one reason Ganeden last monthopened a microbiology laboratoryat its headquarters on Landerbrook

Drive, Mr. Bush said. The scientistwho ran the company’s former labin Miami since has moved toNortheast Ohio.

“We have lots and lots and lots ofproducts ready to hit the market,”he said.

Today, most of Ganeden’s revenuecomes from food products thatcontain GanedenBC30, a bacteriastrain designed to boost the im-mune system and to promote properdigestion by fighting unfriendlybacteria in the gastrointestinal

tract. The strain forms a spore thatprotects the bacteria until it arrivesin the small intestine, where it begins replicating.

Ganeden doesn’t limit itself tofood products. It just sold to a live-stock feed company the exclusiveright to sell its Ganpro brand of bacteria in feed for cattle, swineand poultry, and two cosmeticscompanies have agreed to license anew anti-aging product called Bon-icel.

However, food is driving most of See GANEDEN Page 20

Shareholderscould overruleTimken’s desireto keep steel unit Activist: Firm is too diverse; analyst disagreesBy DAN [email protected]

Canton-based Timken Co. haschosen to keep its bearings, and itssteel, too.

Whether it can continue to do sowill be up to its shareholders.

The company says it already hasconsidered the request of an activistshareholder that it split itself in twoby spinning off its steel businessand remaining as a stand-alonebearings and industrial equipmentcompany. Timken says it has decidedagainst the move, but shareholders

likely will decide the matter nextyear in a contentious vote.

Timken might prevail, though —and perhaps it should, says at leastone prominent securities analyst.

“I’m not particularly convincedthat (split-up) would be the bestmove for Timken,” said Eli Lust-garten, senior research analyst withLongbow Research in Independence.“I’m not sure much will happen outof this current proposal.”

Timken is in the sights of hedgefund manager Ralph Whitworth.The Californian owns or controls

CHRIS SZAGOLA/CAL SPORT MEDIA

The man of the hour, Kent State football coach Darrell Hazell

Lefkowitz Bush

MAC’s ability to retain coaching talent may face another test

By JOEL [email protected]

When Kent State Universityathletic director Joel Nielsenwas hired to replace the veteran Laing Kennedy in

March 2010, the former made no bonesabout where he saw opportunities for theschool’s athletic department: on the foot-ball field.

Mr. Nielsen said a successful footballteam influences not only the department’sbottom line, but also “develops life andspirit on campus in the fall.”

And Kent has accomplished that goal:After hiring Ohio State University assis-tant Darrell Hazell in December 2010, theFlashes have turned a once-dormant program into the nation’s darling, with —depending on last Friday night’s Mid-American Conference championship game

ON THE FOOTBALLCOACHING FIRING LINE

A look at major-conference programswith football coach openings and thatcould be interested in Kent State coach Darrell Hazell, who is paid $300,000:

Arkansas: fired John L. Smith on Nov.24; he was paid $850,000

Auburn: fired Gene Chizik on Nov. 25; hissalary of $3.5 million topped this group

Boston College: fired Frank Spaziani,who made $1.09 million, on Nov. 25

Colorado: fired Jon Embree on Nov. 25;Mr. Embree was paid $725,000

Kentucky: dismissed Joker Phillips, whomade $1.7 million, on Nov. 4

North Carolina State: fired Tom O’Brienon Nov. 25; NC State paid him $936,225

Purdue: fired Danny Hope on Nov. 25; hemade $970,000

Tennessee: Derek Dooley, who was paid$2 million, was fired on Nov. 18See HAZELL Page 9

See TIMKEN Page 20



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Volume 33, Number 47 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the third week of May and fourth week of May, the fourth week of June and first week of July,the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland,OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio,and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.

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Britton Gallagher quickly outgrowsnew space at One Cleveland CenterInsurance broker willlease another 6,000square feet afteradding 18 to staff

PHOTO PROVIDED

The lobby area of Britton Gallagher’s new One Cleveland Center offices

By MICHELLE [email protected]

Six months after Britton Gallaghermoved into its new digs in down-town Cleveland, it has outgrown thespace.

Now, the insurance brokerage ispreparing to exercise the rights underits lease at One Cleveland Center toadd and build out roughly 6,000more square feet on the building’stop floor.

The reason: Since early June, whenthe firm moved its offices to Cleve-

land from Solon, it has added 18people, said Wendy Kertesz, directorof marketing.

Those additions bring the firm’stotal employees to 75, and leave noteven an extra cubicle for the insur-ance representatives who at varioustimes spend a day or two at BrittonGallagher, said Lee M. Stacey, CEOand president. In retrospect, he noted,it would have behooved the firm tobuild out all the space at once, notjust its 20,000 square feet on the 30th

floor.Mr. Stacey said he didn’t have an

estimate last week for what build-outand furnishing of part of the 31st

floor will cost.“We’ve had some opportunities

that presented themselves in 2012that we took advantage of, and it increased our requirements for office space faster than we antici-pated,” Mr. Stacey said. “The kindof growth that we’re experiencing isa good problem to have.”

Britton Gallagher since June hasclosed on two acquisitions and mayclose on a third before the year isover — an unparalleled pace for thefirm, according to Mr. Stacey, whobecame its top executive in Septem-ber 2011. It added three employeesin acquiring Beckman InsuranceAgency of Milwaukee, and it addedRob Previte, too, when it acquiredMr. Previte’s voluntary benefits brokerage, All Pro Benefits LLC,which was based in Solon.

But it isn’t just acquisitions driving Britton Gallagher’s need forsquare footage. The firm also created14 positions, including five to forma division that focuses on providinginsurance to professional athletesand entertainers and five corporatepositions as well, Ms. Kertesz said.

It’s shaping up as a big 2012.First, a move that cost more than $2million and now the need for morespace, plus revenues that are pro-jected to increase more than 9%year over year to $12 million from$11 million, Mr. Stacey said.

Considering that the insuranceindustry has endured recent yearswhere growth of 1% or 2% was considered “a triumph,” Mr. Staceysaid, company officials are “thrilled”

with this year’s revenue growth.“This is a nice pace of growth for

us,” he said.

Business gets a bounceMr. Stacey said he couldn’t disclose

much about the acquisition dealcurrently under negotiation, butnoted Britton Gallagher has soughtand will continue to seek acquisi-tions of other brokers.

The addition last June of BeckmanInsurance Agency, which special-ized in insuring family entertainmentcenters — you know, the placeswith go-karts, driving ranges andbatting cages — complementedBritton Gallagher’s Amusement In-surance Resources division, whichhe said is known as the “800-poundgorilla” in the insurance of inflata-bles, or bouncy houses.

And last month’s completion ofthe deal for All Pro Benefits adds tothe offerings of Britton Gallaghervoluntary benefits, which includelong- and short-term disability insurance that often is paid for infull or in part by employees, not employers. Mr. Stacey said he expects demand for such benefits togrow as the cost associated withhealth care reform leads more em-ployers to seek to deliver value totheir employees at little or no cost tothe employer.

Mergers and acquisitions amonginsurance agencies and brokeragesin the United States totaled 351 in2011, up 44% from 243 in 2010 andnearly double the 176 mergers in2009, according to a study by Con-ning Research & Consulting, whichprovides insurance industry research.Year-to-date numbers for 2012 arenot available, a firm director said.

Britton Gallagher’s Mr. Staceysaid he has seen a renewed interestin the marketplace for M&A discus-sions, largely because valuationshave improved with the economyand because of the expectation thatcapital gains taxes will change dra-matically in the new year.

Asked if Britton Gallagher wouldcontinue to be acquisitive, Mr. Staceyreplied, “Yes, we’ve got an appetitefor this. We’ve found this is a veryeffective use of our capital.” ■

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Calif. outlet expert targets stalled Garfield Heights site Massive Bridgeview Crossing complex firstmust be untangled from multiple lawsuits

The stalledBridgeviewCrossing devel-opment inGarfieldHeights, as seenin 2009. A developer wantsto turn the siteinto an outletcenter.FILE PHOTO/STAN BULLARD

By STAN [email protected]

A new plan is afoot for an outletshopping center on the hugeGarfield Heights site of the stalledBridgeview Crossing retail project.

Craig Realty Group, the firm of nationally known outlet center pioneer Steven Craig, lists a proposalfor what it calls the “Outlets atCleveland” on its website, www.craigrealty.com. The Newport Beach,Calif.-based developer even refersto the project in passing in news releases on other topics.

A Craig Realty brochure on thewebsite states that the proposedproject would add brand-namestores and those “the current market is missing,” all within “a fewminutes drive from affluent sub-urbs.”

The brochure gives no clue to thepotential center’s size but touts that150,000 cars daily pass the site at theI-480 and Transportation Boulevardinterchange. However, an outletcenter there likely would be sub-

stantial. City-approved plans forBridgeview proposed an 800,000-square-foot center on the 90-acresite before prospective tenants pulledout, contractors exited the job andlitigation engulfed the project in2009.

Reached by phone last Monday,Nov. 26, after failing to return twoprevious calls, Mr. Craig said he hadto catch a plane and could not taketime to discuss the project then orlater in the week. He also did not return a subsequent email. CraigRealty owns 11 outlet centers acrossthe nation and has seven more inthe development stage, including“Outlets at Cleveland.”

Mr. Craig is in position to gaincontrol of the site as he leads an in-vestor group called “Garfield HopeAcquisition LLC” that in February2011 acquired Huntington Bank’sloan for the project. At that time,Mr. Craig downplayed prospects foran outlet center, telling Crain’sCleveland Business that he fre-quently invested in discounted distressed mortgages in hopes of

reselling them at a profit. If nothingelse, Mr. Craig in early 2011 said hewould have to sit on the site awhileuntil its long-term value is realized.

Since then, though, outlet shoppingcenter proposals have sprung upacross the nation at a frenetic pacethanks to retailer demand.

Richard Moore, a Solon-based realty expert at RBC Capital Markets,said developers are proposing multiple potential outlet centers in

Charlotte, Phoenix and St. Louis,and three proposals in Houston re-cently dwindled to one.

“Retailers are absolutely dying toget into outlet centers,” Mr. Mooresaid in a Nov. 28 interview. “Theirstrategy is to have a bricks-and-mortar location in a mall, to sell overthe Internet and to be in an outletcenter. Demand for space is high.”In the weak economy, discount-ori-ented shopping has gained favor,particularly at outlet centers, he said.

Garfield Heights Mayor VincentCollova described resolution of thepending litigation as “close but notfinalized,” but he hopes that happensin the next few months.

The mayor said steps to restartingconstruction on the site, wherework began in 2006, are under wayas Mr. Craig and his lawyers try to untangle multiple lawsuits over the project. He noted principals of Garfield Heights-based Snider-Cannata Interests, who spent yearspreparing the Bridgeview Crossingproject, still own the site althoughtheir ownership is contested in theCuyahoga County Court of CommonPleas.

Getting past the pastThe court-appointed receiver for

Bridgeview, David Browning, saidMr. Craig’s lawyers and others aretrying to resolve multiple issues toaid Craig Realty’s efforts to gaincontrol of the land and to move for-ward. A $9 million lawsuit by Panz-ica Construction Co. of Mayfield

Village to foreclose on Bridgeview inOctober 2009 for disputed construc-tion bills also is pending, accordingto Mr. Browning and court records.

“I don’t know what the futureholds, but I believe strongly that is agood location,” said Mr. Browning,managing director of the Clevelandoffice of brokerage CBRE Group. “Ithas tremendous regional access-ibility. Ultimately, there are a lot oftenants who would love to be there,but whether its best use is as an out-let center I don’t know.”

For his part, Mayor Collova saidhe is excited about an outlet centerconcept as opposed to a typical big-box shopping center.

“It’s something different thatwould draw more shoppers to thearea,” the mayor said. He said hisstaff plans soon to have a confer-ence call with Mr. Craig to discusspotential financing issues and infra-structure improvements, such as realigning roads to the adjoining interchange.

RBC’s Mr. Moore said he thinksNortheast Ohio could support another outlet center because of thesize of the region. He said a high-quality operation could work theredue to the site’s proximity to nearbyaffluent suburbs, and distance toexisting area outlet centers.

The Garfield Heights site is 31miles from Aurora Farms PremiumOutlets in Aurora and 45 miles fromthe Lodi Station Outlets in Burbank,Ohio, according to Craig Realty’sbrochure. ■

CBiz Inc. hassigned a definitiveagreement to acquirefor an undisclosed price the non-attest assets of PHBV Partners LLP, which is the government healthcare practice of CliftonLarsonAllen.

Concurrent with this deal, Myersand Stauffer LC announced it hassigned a definitive agreement to acquire the attest business of PHBVPartners. CBiz maintains an admin-istrative service agreement with Myers and Stauffer. The two companies are separate and inde-pendent legal entities that haveworked together since 1998 toserve clients’ business needs.

PHBV is a professional consultingand accounting service providerspecializing in health care compli-ance on behalf of federal and stategovernment agencies. PHBV spe-cializes in Medicare and Medicaidcontract compliance, investigativeservices, performance

auditing, andaudits ofMedicare

Advantage and prescription drugprogram. With regional offices inRichmond, Va.; Baltimore, Md.; Indianapolis, Ind.; Austin, Texas;Cranford, N.J.; and Raleigh, N.C.,PHBV is expected to add approxi-mately 185 employees to CBiz.

CBiz said the transaction is expected to add about $30 millionto its revenue and about four to fivecents to its diluted earnings pershare in 2013.

In commenting on the deal, CBizchairman and CEO Steven L. Gerardsaid in a statement, “Very rarely doyou get an opportunity to mergetwo world-class operations such asCBiz and PHBV Partners. We will be able to expand our knowledge,resources and services in order toprovide superior products and services to our clients.”

The deal should close by Dec. 31.

CBiz buys health care compliance specialistON THE WEB Story from www.CrainsCleveland.com.




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Mark Bachmann, a partner at theMarcus Thomas LLC ad agencywho heads its media planning andbuying unit and admits to readingseveral newspapers daily, said hedidn’t think a reduction in thenumber of days a week The PlainDealer publishes directly would alterany clients’ ad buying plans.

“I think the only way it would is ifit would reduce the number of sub-scribers; then I’m losing audience,”Mr. Bachmann said. “But, otherwise,I’m not usually running five- or seven-day-a-week programs. It’sgenerally only couple-day-a-weekprograms, so, theoretically, (adver-tisers) wouldn’t be impacted byhow many times a week the papercomes out.”

Among Marcus Thomas’ clientsare GE Lighting, the Ohio Lotteryand Shearer’s Foods, which makesand sells potato chips and othersnack foods.

Bernie Moreno, president of Collection Auto Group, which hassix auto dealerships in NortheastOhio, said he didn’t anticipatemuch impact from a curtailment of distribution, because he only advertises in The Plain Dealer oneday a week, on Saturdays.

But he changed his tune a bitwhen told that Saturday might beone of the days the paper would notpublish.

“Yikes, that’s not good,” Mr. Morenosaid. “We’d have to re-evaluate ourwhole strategy at that point.”

However, once he absorbed thepossibility of losing Saturday distri-bution of his ads, Mr. Moreno saidthe greater issue ultimately wouldbe whether the newspaper canmaintain its audience.

Last month, Local 1 of The Newspaper Guild, which representsnewsroom employees at The PlainDealer, started a media blitz to getreaders to express concern aboutthe likelihood the newspaper willcut its publication schedule and willlayoff of a large number of reportersand other editorial employees inthe process.

As of press time last Friday, Nov. 30, more than 5,600 peoplehad signed the “Save The PlainDealer” petition at www.change.org/petitions/save-the-plain-dealer. Theunion has bought billboards, busadvertising and other media to pro-mote its campaign, which can be

found at www.facebook.com/SaveThePlainDealer.

Staff cuts in the offingHarlan Spector, a Plain Dealer

reporter and chairman of Local 1,said last Thursday, Nov. 29, that ata recent meeting with the paper’smanagers he was told layoffs arelikely after Jan. 31, when a contrac-tual side agreement freezing thenewsroom’s staff size expires.

“The company made it clearthere would be staff cuts,” he said.“After Jan. 31 the company has theright to decide the size and compo-sition of the work force.”

The likelihood of layoffs, to Mr.Spector and others, suggests a cut-back from publishing seven days aweek is imminent.

Plain Dealer publisher Terry Egger and editor Debra Adams Sim-mons in a Page One letter to readerson Nov. 18 acknowledged that theloss of advertising to online mediaand other competitors “requires asignificant reset of our business.”

Asked last Thursday specificallyabout the potential response of advertisers to a change in The PlainDealer’s print schedule, AndreaHogben, the newspaper’s senior vicepresident for sales and marketing,said in an email, “It should be clearthat we have not announced a re-duction in the publication schedule.We’re still assessing the local model,and it’s premature to speculate onwhat changes may lie ahead.”

However, Ms. Hogben addedthat the newspaper is talking to advertisers about how their needswill be met in the future.

“Ultimately, our goal is to continueto develop more solutions to helpour partners connect to their cus-tomers in new and innovative ways,”Ms. Hogben said. “We are deeplycommitted to our advertisers andwill work closely with them as theirbusinesses, as well as ours, evolve.”

Precedent-settersAdvance Publications, which has

owned the Plain Dealer since 1967,is committed to what the industrycalls a “digital first” future, believingthe future of daily news is online. In2009, it ceased publishing as the AnnArbor (Mich.) News and announcedthat the online AnnArbor.comwould be the community’s “news-paper.” It actually still publishestwice a week, but under the banner

of “AnnArbor.com.”More recently, in October, Advance

cut distribution of the Times-Picayune of New Orleans and threeof its newspapers in Alabama tothree days a week — Wednesday,Friday and Sunday. At the time,Steve Newhouse, president of Advance.net, and a descendent ofAdvance founder S.I. Newhouse,said changes in the industry, partic-ularly the decline of print advertising,made it financially impossible toproduce a seven-day-a-week news-paper in those cities.

Last August, Advance announcedsimilar strategies in Syracuse, N.Y.,and Harrisburg, Pa.

Since then, industry watchershave expected the company to makesimilar decisions about its othernewspapers in its group of morethan 25 dailies, which also includesthe Star-Ledger in Newark, N.J., andThe Oregonian in Portland, Ore.

The Plain Dealer had a weekdaycirculation of 246,571 as of lastMarch 31, according to the AuditBureau of Circulations. If the news-paper cuts back from seven-day cir-culation, it would make Clevelandthe largest city in the United Stateswithout a daily newspaper.

Mourning a potential lossOne large group of advertisers

that likely would suffer from thecutbacks would be funeral direc-tors, which collectively may be thelargest seven-day-a-week advertisersin The Plain Dealer. Because of thenature of their advertising and thegenerally older, less computer-literateaudience for their death notices announcing dates and locations offunerals, they could have a hardtime adjusting.

James Busch, president of BuschFuneral and Crematory Services,which operates six funeral homes inthe region, said he has begunpreparing for the possibility of aPlain Dealer distribution cutbackby talking to funeral directors incommunities such as New Orleansand Ann Arbor.

Mr. Busch anticipates some fu-nerals may not be scheduled untilafter a death notice can appear, butthat some people still will miss op-portunities to pay their respects.

“If someone doesn’t have thenew technology in their livingroom, they’re still relying on thedaily newspaper,” he said. ■

continued from PAGE 1

Ads: Funeral homes could suffer most

Study: Pensions grow tougher to fundBy KEVIN OLSENPensions & Investments

The U.S. pension system is expectedto become harder to keep ade-quately funded as the “working-age” population is expected to declineby 2020, according to a report frombenefits consulting giant Mercer.

The U.S. working-age population,defined in the report as ages 15-64,is expected to decrease to 64% by2020 from 66% this year. It was at67% in 2007.

“It’s the proverbial pig goingthrough the python,” said ArthurNoonan, senior partner in Mercer’sretirement business, about moremoney being paid out than goinginto pension funds.

Mr. Noonan said plans are gettingmore expensive for a number ofreasons, including an aging work

force, an increase in retirees, morepeople retiring early and longer lifeexpectancy. The only ways for cor-porate plans to respond is throughfinancial management of the pen-sion fund and strategic manage-ment of the work force.

Pension funds need to have astep-by-step derisking strategy,something that was lacking in the1990s when pension funds wereoverfunded, Mr. Noonan said.Lump-sum offers also can helpcompanies as they will reduce thesize of their pension plans.

In work force management, com-panies adequately must conveyhow they value long-tenured em-ployees because plan participantsretiring early or working too longcould make the plan more expen-sive.

As for reform of public pension

funds, Mr. Noonan said, “My senseis (legislators) are not willing to takeit on in full at this point. Unless youdo something dramatic, you’re notgoing to close that gap.”

China, the United Kingdom andmost of Europe also are expected tosee two-percentage-point declinesin the working-age population by2020. Canada, Japan and Russia areprojected to have a four-percent-age-point decline, and Hong Kongwill drop six percentage points.

Brazil, India, Indonesia, Malaysiaand Mexico are expected to see a two-percentage-point bump in 2020,while Pakistan is projected for athree-percentage-point increase. ■

Kevin Olsen is a reporter with Pensions & Investments, a sisterpublication of Crain’s ClevelandBusiness.



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Getting it Right

— a possible Bowl ChampionshipSeries game and a significant cashinflux in their future.

Now comes the critical part forKent and any MAC school: sustainingit. Mr. Hazell, at $300,000, is paidthe lowest salary among 13 MACfootball coaches, and with eightmajor-conference programs that already have fired their coaches, thesharks are circling.

At those eight schools —Arkansas, Auburn, Boston College,Colorado, Kentucky, North CarolinaState, Purdue and Tennessee — theaverage 2012 coaching salary was$1.47 million, according to datacompiled by USA Today. Auburn’sGene Chizik’s $3.5 million leads theway, with Colorado’s Jon Embreenotching the lowest pay at $725,000.

The average salary of 13 MACfootball coaches, meanwhile, is$374,338, with Ohio University’sFrank Solich leading the pack at$500,000 annually and Mr. Hazellbringing up the rear.

MAC commissioner Jon Stein-brecher said member schools’ abilityto compete would depend on who’sdoing the raiding. “If it’s the Moun-tain West or Conference USA, (theleague could compete),” he said. “Ifit’s the Big Ten or SEC, that’s awhole different animal.”

Pressure from AthensWere Kent State not able to keep

Mr. Hazell in the fold — and wereMr. Nielsen forced to search the as-sistant ranks for a coach at anotherbargain price — the school wouldtake a far different tack than MAC ri-val Ohio University. OU nabbed Mr.Solich in a coup after he was let gofrom the University of Nebraska, andlast March, hired former Kent bas-ketball coach Jim Christian.

Mr. Christian replaced John Groce,who was hired by the University ofIllinois after leading OU to a 29-winseason and two upsets in the NCAATournament, taking the Bobcats tothe Sweet 16. Most surprising: OUpaid Mr. Christian the same amounthe was making at Texas ChristianUniversity — about $600,000, including incentives — which faroutpaced what any MAC school hadpaid a basketball coach to that point.

Upon the hire, OU presidentRoderick McDavis spoke of his desire to continue the momentumthe Bobcats had built.

“My feeling was, with the right

pieces in place — which we have infacilities and leadership — we wantedto keep this momentum in place,”Dr. McDavis said. “That’s what madecoach Christian so attractive to us.”

That feeling is echoed amongother officials in the league, includ-ing outspoken University of Akronmen’s basketball coach KeithDambrot. Mr. Dambrot has talkedwith Duquesne University multipletimes the last few years about a potential move; Mr. Dambrot eachtime has returned to the Zips. Buthe, too, is looking at what MACschools will do to keep top coaches.

“The more people invest in ourleague, everybody has to either putup or shut up,” he told The AkronBeacon Journal in April, upon Mr.Christian’s hiring.

Those decisions are difficult,though. Ohio State spent $39.6 mil-lion in 2010-11 on football andmen’s basketball, according to De-partment of Education data. TheBuckeyes can afford those outlays,with an $18.7 million profit fromathletics in that academic year.

Kent State, by contrast, spent $6.4million on those two sports in 2010-11, according to federal data, butjust broke even, thanks to institu-tional support and a student fee.

“It’s a challenge for conferenceslike the MAC, Sun Belt and WAC(Western Athletic Conference); wedon’t have a football stadium thatholds 100,000 or $100 million in rev-enue,” said Mr. Kennedy, the for-mer Kent State athletic director.

“But if you were to do an impactstatement on the effect the footballteam’s success has had on theschool, it’s very significant,” saidMr. Kennedy, who still teaches ethicsin sports at Kent State and also con-sults for executive search firm Aldenand Associates of Florence, Mass.

“You could make a strong casethat we need to up the ante to keepsuccessful programs trucking alongand keep coaches like Hazell. That’sthe decision that’s facing us now:Can we do that? Or, if after we expe-rience success, can we sustain it ifmajor programs take our coaches?”

Title IX concernsThe danger for schools in the

MAC and other smaller conferencesin the football “arms race,” as Mr.Kennedy termed it, goes beyond thegridiron. Title IX, the landmark 1972legislation guaranteeing womenequal access in higher education,

After strategy, culture shakeups, Broadvox dials in to growth By CHUCK [email protected]

Bruce Chatterley was hired toput Broadvox Inc. in gear.

The digital phone serviceprovider, which was founded inCleveland and maintains a local of-fice with 76 employees, has tripledits sales and the size of its employeebase since 2005. Lately, though, ithas been “stuck in neutral” becausethe company lacked a growth strat-egy, said Mr. Chatterley, who washired as president and CEO ofBroadvox last March. The telecom-munications industry veteran re-placed co-founder Andre Temnorod,who remains executive chairman ofthe company.

Since Mr. Chatterley came on

board, the company has overhauledits management team and replacedabout 40% of its 260 employees.Many left on their own, but somewere forced out. Co-founder EugeneBlumin, who is Broadvox’s chiefoperating officer, estimated thatfive people were replaced in Cleve-land, though some left by choice.

Mr. Chatterley said Broadvoxneeded to shake things up, espe-cially at its Atlanta office. Broadvoxacquired the office with the purchaseof Cypress Communications in Jan-uary 2011. That company, whichfocused on selling data and phoneservice in buildings with multipletenants, had long suffered from “alack of investment,” he said.

“The asset was a little bit fallow,and the culture was a little bit

negative,” he said.Broadvox’s management team

looks different, too: Mr. Chatterleyhas hired new people to fill six roleson that team. Three of the positionsare new, and one is a combinationof two roles. All but one of the newhires are based in Seattle, includingMr. Chatterley himself. The companylong has said that its corporateheadquarters is in Dallas, thoughrelatively few people work fromthat office.

The new team already has startedto make a few changes in the wayBroadvox does business. The com-pany — which sells digital phoneservice to businesses and also helpsdigital carriers tap into the publictelephone network — is in theprocess of hiring inside sales people

to staff a new call center in Seattlethat will employ about 20 people,Mr. Chatterley said. They are workingto form partnerships with consul-tants who help businesses workthrough information technology issues; Broadvox offers the IT con-sultants financial incentives to sellthe company’s products, he said.

Broadvox also has simplified itslineup of product offerings, is plan-ning to focus more on improvingcustomer service and aims tospend more time measuring whatworks and what doesn’t, he said.

Mr. Chatterley said he sees newopportunities at Broadvox “everytime I turn over another rock.” Hesaid some of those opportunitiesexist in the portion of Broadvox thatsells wholesale access to the public

telephone network, which digitalcarriers use when their customerscall people who don’t have digitalphone service. The wholesale divi-sion, based in Broadvox’s downtownCleveland office, accounts for abouthalf the company’s revenue, whichis close to $100 million, he said.

Broadvox’s revenue has climbedfrom about $30 million in 2005. Thecompany employed just 70 peopleat the time.

Given its size, Broadvox neededa CEO with deep management expe-rience in the telecommunicationsindustry, said Eugene Blumin, whowith Mr. Temnorod founded thecompany in Cleveland 11 years ago. He serves as Broadvox’s chiefoperating officer from its Cleveland office. ■

Hazell: MAC schools face many pressures also forced colleges to offer athleticopportunities to women in directproportion to enrollment figures.

So, because Kent State’s fall 2012enrollment across its eight cam-pus-es is 41% male and 59% female, ac-cording to university figures, the

school’s roll of intercollegiate athletes also must reflect those per-centages. That’s a goal made harderto achieve by the 100 or so footballplayers it has each year.

Fulfilling that requirement is notonly based on participation, though;it also includes a financial compo-nent. So, if Kent State wants to addanother $700,000 to Mr. Hazell’ssalary each year, the effects on the

school’s ability to comply with TitleIX are nothing to brush aside.

“It’s a concern, because on theMAC level, a comprehensive (ath-letic) program is very important. Wehave balanced programs in theMAC that can compete nationally,”Mr. Kennedy said, noting KentState’s baseball program, which ad-vanced to its first College World Se-ries this past summer. ■



elcome to the wild andwonderful world of aboom state.Yes, I know it’s strange to

describe Ohio as a “boom state.”Well, look through our first issue of

Shale magazine that accompanied thisweek’s edition of Crain’s Cleveland Busi-ness and you’ll begin to get a real appre-ciation of how far-reaching thiswhole shale gas/oil develop-ment is in the Buckeye State.

Let me put it another, morerudimentary way: $636,000 a day.

That’s right. Last week, Gulf-port Energy Corp. announcedthat one of its wells in BelmontCounty was producing nearly7,500 barrels of oil equivalent(natural gas, oil and natural gasliquids) per day, and last week’s per-barrel price was about $85.

That’s a big strike, and it’s Gulfport’sbest so far in the Utica shale. Followingthe announcement, the company’sshares jumped 16% to a 52-week high.

This happened as construction goeson for a $500 million processing center

Mark West Energy is building in once-sleepy Cadiz. “Early results indicate this(Utica shale) play is one of the most exciting new areas for natural gas andliquids production in the United States,”Mark West CEO Frank Semple told The(Youngstown) Business Journal.

And remember that Ohio first startedto feel the impact of these huge invest-

ment announcements a coupleyears back when a $700 millionaddition was built at aYoungstown steel mill. Sincethen, hundreds of millions ofdollars have been paid to Ohiolandowners for mineral rights.

One could argue Ohio hasseen nothing of this magnitudesince the early days of the In-dustrial Revolution and the

opening of the Ohio Canal. It affects allsorts of industries in our state. We knewtwo years ago it would be a great story.

Our manufacturing reporter, DanShingler, was on this story from its earlieststages because he was seeing its impacton the companies on his beat. He con-vinced me that a magazine supplement

was worth trying, and I agreed. He became editor of this new venture, andwe brainstormed the first issue, a nice44-page package of interesting storiesand graphic illustrations.

Our supplement is also being distrib-uted to energy-rich regions around thecountry, with the help of our sister pub-lications Investment News, Plastics Newsand Pensions & Investments. It is beingdistributed to every one of their sub-scribers in shale-rich areas of Texas,Louisiana, North Dakota, West Virginia,Pennsylvania, Ohio, Michigan and NewYork. We soon will add distribution totheir subscribers in America’s energycapitals such as Houston, Denver, Tulsa,Oklahoma City and Baton Rouge.

We know that folks in the oil and gasindustry want to know all they can aboutone of the country’s richest new sourcesof energy. And our advertisers want theirmessage in front of them, which is whywe also left open this first issue at theShale Report area of our website.

In 2013, you’ll need to be a Crain’ssubscriber to access this rich informa-tion. There, you’ve been warned. ■


Making itO

hio hasn’t been a hotbed of labor-manage-ment hostility for well over a decade, yetonly now is the stigma of unions and manufacturers butting heads throughout

the 20th century fading from the minds of the site selection experts who help companies choosewhere to expand or relocate their plants. It’s a creditto manufacturers and the men and women whowork for them that the perception finally is catchingup to the reality.

The contentiousness that existed between union-ized employees and their factory bosses in North-east Ohio and the belief that labor costs here arehigher than elsewhere because of the presence oforganized labor haven’t made the jobs of local economic development officials easy. There’s noway of knowing how many manufacturers over theyears didn’t bother to give this region even a side-ways glance when putting together their short listsof where to grow their businesses. But it happenseven now, said Tom Waltermire, president of regional business attraction group Team NEO.

“The consultants tell you it goes on” when itcomes to excluding Northeast Ohio and the statefrom site searches because of what Mr. Waltermirecalls “the union issue.”

“We continue to be left out of deals because ofperception,” Mr. Waltermire said during a recentmeeting with Crain’s reporters and editors.

However, the tide definitely is turning, accordingto Mr. Waltermire.

“Our business attraction people said one of thetrends they are recognizing is that the union ques-tion is not coming up as often,” he said.

Ohio is landing on the lists of more site selectors,Mr. Waltermire said, as manufacturing reboundsand finding skilled or trainable workers has becometough in many parts of the country. As a result,companies that have been wary of Ohio because ofits union reputation are returning here and to otherunionized states with pools of machinists, welders,electricians and other skilled manufacturing workers.

But we also believe union workers and their employers have done much to put labor strife in therear-view mirror of site selectors through greatercollaboration as they both look to assure the futuresof the manufacturing operations that provide theirlivelihoods.

Prime examples of the benefits of labor-manage-ment cooperation are found at the Ford Motor engine plant in Brook Park and the General Motorsassembly plant in Lordstown, which have becomemodel operations for the respective automakersthat run them. So, too, has the ArcelorMittal steelmill in Cleveland’s Flats, where the quality of thesteel it makes is considered the best in the company.

The positive vibe from these unionized plantshelps dispel fears of other manufacturers that they’llbe stepping into labor quicksand if they grow inNortheast Ohio — and gives them one less reason toleave the region off their lists of potential sites.

“When executives say, ‘Maybe we should considerOhio,’ man, you’re now in a different league,” Mr.Waltermire said. And that change in thinking canonly spell good things for the state.

FROM THE PUBLISHER

BRIANTUCKER

Shale covers oil and gas revolution

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

ROBERT MCCLELLANDShaker HeightsOnline. I like the simplicity, doing it at home. Most of theretailers are providing freeshipping. And I have a vestedinterest in L.L. Bean, since myson works for them.

➤➤➤➤ Watch more responses in our Big Issue video by visiting the Multimedia section at www.CrainsCleveland.com.

THE BIG ISSUE

EDWARD OPETTRocky RiverIn person, because I buy specialized gifts. I want to seethem.

RON SMITHCollinsville, Ill. (visiting tosee the Christmas StoryHouse)Online, because I’m lazy. I canshop at a thousand places andnever leave my chair.

SHERYL BENFORDShaker HeightsA little bit of both. … About30% online and 70% in person. For people here, Iwant to see (a gift) and touchit and take it to them.

How do you plan to do the bulk of your holiday shopping — online or in person?

W



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Latest developments inshale gas litigation:What you need to know to navigate theexpanding maze of litigation issues.

2012

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Fox’s ‘fair and balanced’ fits network

WRITE TO USSend your letters to: Mark Dodosh,editor, Crain’s Cleveland Business,700 W. St. Clair Ave., Suite 310,Cleveland, OH 44113-1230e-mail: [email protected]

LETTERS■ David B. Hollister’s Nov. 26 letterabout a self-delusional Fox Newscan be summed up in a few words —mindless and deceitful.

Mr. Hollister wants to help theGOP with this brilliant suggestion,“Turn it off. The ‘it’ is Fox News.” Hecites a study conducted by FarleighDickinson University that shows FoxNews viewers are less informed thanpeople who watch no news at all.Sounds like liberals trying to makethe uninformed feel more relevant. Iwonder if there were any taxpayerdollars wasted on this collection oftrash.

For those not familiar, FarleighDickinson is a university founded in1942 by Dr. Peter Sammartino. Dr.Sammartino was a founding partic-ipant in a progressive experimentalapproach to global education at Columbia University. He also hadclose ties to the United Nations. I’m

thinking if this progressive educatorwere still alive today, Fox Newswould not be his primary source ofnews.

We have no idea what Mr.Hollinger’s agenda is, but clearly it’snot to aid the GOP. Prime-time newshours are 6 p.m. to 8 p.m. Crain’sreaders should tune into Fox Newsand see for themselves. Fox News, asadvertised, is “fair and balanced.”

Jeff LongoNorth Royalton

If the name fits …■ Regarding Brian Tucker’s Nov. 26 commentary about the ShenaHardin sentence to carry an “idiot”sign as punishment for driving arounda school bus, I’m not so sure radio

personality Archie Berwick has sucha great message.

Mr. Berwick said people shouldn’tbe called “an idiot” in public. Afterseeing how Ms. Hardin behavedwhile holding her sign, I had a fewother names for her.

Also, had Ms. Hardin’s actionscaused a tragedy to any of the childrenon the bus, we would have been calling her a killer. I can’t help butwonder, would Mr. Berwick have objected to that?

Susan L. GundichCleveland

Judge scolds Goodyear in liability case Tiremaker ignored, objected to plaintiff’s requestsBy MILES MOORETire Business

An Arizona federal judge hassanctioned Goodyear Tire & RubberCo. and two attorneys representingthe Akron-based tiremaker for allegedly withholding documents ina 7-year-old product liability case.

In her Nov. 8 ruling, Chief JusticeRoslyn O. Silver of the U.S. DistrictCourt in Phoenix gave Leroy Haeger,the litigant in the case, until Dec. 14to file a motion for Goodyear and itsattorneys, Graeme Hancock andBasil Musnuff, to reimburse him forattorneys’ fees incurred in hislengthy legal action against thecompany.

Judge Silver also said Mr. Haegerwas free both to renegotiate his set-tlement agreement with Goodyearand to pursue a separate action forfraud.

“Litigation is not a game,” JudgeSilver wrote in the first paragraph ofher 66-page ruling. “It is the time-honored method of seeking thetruth, finding the truth, and doingjustice.

“When a corporation and itscounsel refuse to produce directlyrelevant information an opposingparty is entitled to receive, theyhave abandoned these basic princi-ples in favor of their own interests.”

The case began in June 2003 whenMr. Haeger, his wife, Donna, andtheir children, Barry and Suzanne,went on vacation in their Gulf Streammotor home. The vehicle wasequipped with Goodyear G159 tires.

While on the highway, a front tireon the Haegers’ motor home failed,causing the vehicle to veer off theroad and tip over. All four of theHaegers were seriously injured.

Leroy Haeger and his insurance

carrier, Farmers Insurance Co., filedsuit in 2005, claiming that G159 tireswere defective if used on motorhomes. They were designed only foruse on pickup and delivery trucks,they said.

According to Judge Silver,Goodyear and its attorneys spentyears ignoring or objecting to theplaintiffs’ requests for production ofdocuments. This included at onepoint denying the existence of theresults of high-speed testing ofG159 tires, she said.

“Goodyear and its attorneys developed a strategy, implementedin this case to great effect, to resistall legitimate discovery, withholdobviously (Judge Silver’s italics) responsive documents, allow plain-tiffs and their experts to operate under erroneous facts, disclose smallsubsets of documents as late as pos-sible, and otherwise turn this casebased on a motor vehicle accidentinto an Arizona version of Jarndyceand Jarndyce,” the judge wrote.

Jarndyce v. Jarndyce was an end-less court case created by CharlesDickens in his novel “Bleak House.”

In apportioning sanctions, JudgeSilver made Mr. Hancock responsi-ble for 20% of fees and costs, andGoodyear and Mr. Musnuff jointlyresponsible for the remaining 80%.

Spartan Motors Inc., manufacturerof the chassis on the Haegers’ motorhome, also requested repayment ofattorneys’ fees from Goodyear.

Judge Silver denied Spartan’sclaim, ruling the company did notshow specifically how it washarmed by Goodyear’s withholdingof documents.

She added, however, that Spartanprobably could present a viablecase of fraud against Goodyear in aseparate lawsuit.

“The actions of Judge Silver andher staff reflect an unwavering com-mitment to the pursuit of truth con-sistent with the highest standards ofAmerican jurisprudence,” said DavidL. Kurtz, attorney for Leroy Haeger,after the judge issued her ruling.

In a statement, Goodyear said itwas disappointed in Judge Silver’sruling and was reviewing its avenuesof appeal.

“Goodyear takes its discoveryobligations very seriously,” the com-pany said. ■

Miles Moore is senior Washingtonreporter with Tire Business, a sisterpublication of Crain’s.

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NONPROFITSJEWISH FAMILY SERVICE ASSOCI-ATION OF CLEVELAND: Amy Pincus to director, Know Abuse Prevention Program. LAKEWOOD HOSPITAL FOUNDATION:Emily Speer to assistant director.

REAL ESTATETRANSACTION REALTY: AndrewStrigle and Joseph Weeams III tosales associates.

SERVICEEXSCAPE DESIGNS LLC: John Peterson to design/sales manager.

SHIPPINGGREAT LAKES SHIPYARD: Lisa A.Becton to senior buyer, purchasing;Kyle J. Fries to assistant vice presi-dent, ship repair.

STAFFINGDIRECT RECRUITERS: Norman Volsky to project manager, healthcare IT practice.

TECHNOLOGYHILEMAN ENTERPRISES: Jim Pollock to web developer.

BOARDSGREATER CLEVELAND BETERBUSINESS BUREAU: Ingrid Halpert(Weiss Movers) to chairman; MoreenBailey-Frater and Ella Fong to vicechairmen; James Lineweaver to sec-retary; Bill Mann to treasurer. SAINT JOSEPH ACADEMY: RebeccaDessoffy Bennett (Frantz Ward LLP)to chair.

AWARDSCOLLEGE OF LABOR AND EMPLOY-MENT LAWYERS: Bruce Hearey(Ogletree, Deakins, Nash, Smoak &Stewart, P.C.) to fellow.

Send information for Going Places [email protected].

Parker HannifinCorp. said Miami-Dade County in southFlorida has placed a follow-on orderfor 29 Autocar E3 refuse trucks featuring Parker’s fuel-saving Run-Wise technology.

Miami-Dade County used moneyfrom the U.S. Environmental Protec-tion Agency to buy 15 of the vehiclesas part of the National Clean DieselCampaign’s Emerging TechnologiesList. RunWise is the only drivetraintechnology on the list, according toParker, which did not disclose theprice paid for the vehicles.

Parker said the Autocar refuse

trucksequipped withits RunWise

technology commonly demonstrateannual fuel savings in the range of35% to 50% for the automatic sideloader by reusing as much as 71%of the vehicle’s braking energy. Additional benefits include reducedmaintenance costs, less enginewear and tear, and extended brakelife, Parker said.

The RunWise version of the Autocar refuse trucks currently is in operation in Miami-Dade County;Hialeah and Miami, Fla.; Seymour,Ind.; and Austin, Texas.

Miami-Dade high on Parker technologyON THE WEB Story from www.CrainsCleveland.com.


PHILANTHROPYI N S I D E

DECEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 13

15 ADVISER:FOUNDATION’SREBOOT SERVESAS ROAD MAP.

NEEDS OFNEEDY TIEDONORS INKNOTSCompanies struggle to decide how much theycan afford to give to region’s many nonprofits

By KATHY AMES [email protected]

eff Jarrett’s lineup of annual charity events is akin to a musician’s nationaltour schedule. The appearances are many, and although the chef would liketo reach an even broader audience with his culinary talents, he must draw theline somewhere.

While Mr. Jarrett is in tune with the mission and needs of each of his designatedcharities, the exertion associated with so many functions can take its toll.

“I couldn’t even remember what dish I had planned to do for this fundraiser,” the executive chef of Cleveland Airport Marriott’s AMP 150 said in November during a March of Dimes event at Windows on the River.

See GIVING Page 14

J

Nonprofitsadoptingtechnologyto keep upTools help groups raisemoney, communicateBy CHRISSY [email protected]

The Cleveland Museum ofArt has doubled its member-ship since embracing anonline giving portal.

The Cleveland Clinic has imple-mented a text-to-pledge program atits HeartThrob Ball to raise fundsfor its Children’s Hospital.

The Community Foundation ofLorain County has streamlined allof its board functions and nowcommunicates with its 20 trusteesthrough an online portal.

And the United Way of SummitCounty now promotes the 200-somedaily volunteer opportunitiesamong its 125 agencies through anew online search tool on its web-site.

Nonprofits might not boast themost tech-savvy legacy, but theseNortheast Ohio organizations areamong a growing number that arebelievers when it comes to the powerof the portal, the cloud and otherworldly sounding platforms used to interact with donors, volunteersand board members.

“Everybody knows they shouldbe using more technology to do thekinds of interactions with volunteers,and donors and board members,but it’s a tough position for manynonprofits,” said Robert Fischer, director of the master of nonprofitorganizations degree at the MandelSchool of Applied Social Sciences atCase Western Reserve University.

The “generational nature of tech-nology” coupled with the fact thatmost nonprofits communicate witha diverse population means theysimply can’t abandon tried-and-true practices, Dr. Fischer said.

“We are dealing with four genera-tions of individuals and each has adifferent tolerance and preferencefor technology, messaging formatand how stories are told,” said Brian Frederick, president and CEOof the Community Foundation ofLorain County, which manages 530funds.

“Anybody in communications ormarketing right now has a reallychallenging job of how you do thatand with the marketing budgetsmost nonprofits have,” he said.

The secret sauceThat said, two Cleveland compa-

nies — Big River and StreamLinkSoftware — are making compellingcases for nonprofits to take the

See TECH Page 16


The Signature Chefs Auction is one of the approximately 40benefits Mr. Jarrett juggles eachyear with his demanding career,and although each one sets himback “a couple hundred dollars” —along with time spent on logistics— Mr. Jarrett sees a payoff thatgoes beyond a dollar figure.

“People support you when yousupport them,” he said.

Philanthropic outreach is part ofthe culture at many NortheastOhio operations, although bene-factors, particularly small and midsize businesses, say limitsmust be defined to prevent a strainon resources. It’s a difficult balanceto achieve when interests in differentmissions intersect agencies’ pressingneed for aid and donations.

“We’re getting hit up so muchmore frequently,” said Ben Beben-roth, whose Spice Kitchen + Baralso featured samples of its localfare at the March of Dimesfundraiser.

The chef said he’s expanded thebreadth of charities with which hisrestaurant and catering businesshave aligned, although the agenciesmust fit with his operation’s corephilosophies, which revolvearound local investment, educationand environmental stewardship.

“We’ve had to turn down certainevents, but sometimes we’ll auc-tion off gift certificates if we can’tparticipate,” Mr. Bebenroth said.“People don’t like to hear ‘no.’”

Appetite for givingHoward Lewis, founder, chairman

and CEO of Broadview Heights-based Family Heritage Life Insur-ance, has a hard time turningdown requests from organizationsthat focus on human need, healthand children.

Through a mix of corporate donations, his own involvementon various agency boards and staffoutreach, the company aims tomake a difference among about 13entities, including the Leukemia &Lymphoma Society and the Cleve-land Foodbank.

The latter nonprofit in fiscal year2012 received more than $31,000from the company, which employsabout 110 in its home office andabout 5,200 brokers and sales staffnationwide.

In the last 10 years the providerof life and supplemental health insurance products has donatedmore than $235,000 to the Cleve-land Foodbank and is consideredone of the nonprofit’s more generous smaller business contrib-utors.

“Family Heritage Life Insurancehas a very long history of providingextraordinary support to the

Cleveland Foodbank,” said AnneGoodman, the nonprofit’s presidentand CEO.

Mr. Lewis, who said his firm allocates “six figures” in annualcharitable donations, said it’s difficult to carve out a budget forphilanthropy, especially when natural disasters strike, and staffvolunteers and supplies are needed.

“There really can’t be a budget,”Mr. Lewis said. “You have to giveeverything you can give.”

Employees not only are encour-aged to donate their time to acharity of their choice but also arecompensated for their time.

“It’s so much more importantthan just showing up for work andmaking money,” Mr. Lewis said.

Time is moneyMarlene Herman made up for a

10% reduction in her philanthropicbudget due tothe economywith more vol-unteer work, divided among10 to 12 areaagencies.

Whether it’scollecting coatsfor HurricaneSandy victimson behalf of Chagrin HighlandsRotary Club or engaging individuals with developmentaldisabilities in sports challenges,the owner and president of AamcoTransmission & Total Car Care inCleveland and Cleveland Heightschannels her humanitarian effortswith missions she is interested in,although she rotates her involve-ment.

“I’ve come full circle with a lot ofdifferent things,” she said. “I don’tbelieve you can arbitrarily give to

any organization that asks. Youmake the most impact with theones you are passionate about.”

Carol Staiger, owner of Cleve-land Heights-based Vantage Point Enterprises, a businesscoaching and consulting outfit, advises her clients to carefullymanage the amount of charitieswith which they are involved, andto alternate involvement every fiveor six years.

She applies the same principlestoward her own advocacy efforts,which includes leadership roles forfour organizations such as theCouncil of Smaller Enterprises anda Minority Business DevelopmentAgency business center.

“Busy people get things done.But if someone keeps asking mefor more and more, I will say ‘no’ ifI can’t do it well,” Ms. Staiger said.“You need to maintain a hold onsanity.” ■

“There really can’t be a budget. You haveto give everything you can give. ... It’s somuch more important than just showing upfor work and making money.”

– Howard Lewis,founder, chairman and CEO,

Family Heritage Life Insurance


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PHILANTHROPY


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Your philanthropic support helps University Hospitals provide the

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PHILANTHROPY

Foundation uses tough times as opportunity to refocus

Change may prompt someorganizations to regret, retrench or even retreat. ForSaint Luke’s Foundation, it

ignited a transformative process of“rethink, redesign and reinvent.”

Since 1997, when it was estab-lished with the charitable assets ofthe former Saint Luke’s MedicalCenter, Saint Luke’s Foundationhas awarded more than $92 millionin grants.

As our board and leaders lookedback on the foundation’s first 14years of grant making, we recognizedour historical spending policy enabled us to award more grantswhen economic conditions were favorable, and fewer when the com-munity most needed our support.

Given persistent economic chal-lenges since 2008, this dichotomycould have compromised our mission of improving the healthand well-being of vulnerable popu-lations in Greater Cleveland.

We knew that our approach hadto change, and we viewed this as anopportunity to reinvent our foun-dation from the ground up.

The journey began in early 2011.Our goals: Identify strategies andinitiatives that have gained traction;invest more in programs and servicesthat can make the greatest impact;and leverage the capacity of non-profits that demonstrate consistentlystrong outcomes.

We turned to industry experts,colleagues and grantees for insights.We studied changing needs in ourcommunity and examined economic,societal and demographic shifts.

We also asked ourselves funda-mental questions: Are we making adifference? Do our processes truly

support our grantees? What can webe doing better? How can we givemore and have greater impact?

Ultimately, our answers sparkeddramatic changes. In December 2011,our board adopted a new spendingpolicy that increased our budget froman average of about $9 million in recent years to $12 million in 2012 inorder to deepen the impact of workthat advances our mission. This year,we changed our grant-making poli-cies to tie awards directly to mission-driven criteria and outcomes.

We also are pursuing a smallernumber of larger and longer-dura-tion grants with organizations thatmake positive impacts in three pro-gram areas: Healthy People, StrongCommunities and Resilient Families.

Our journey led us down avenueswe did not foresee, raised tough issueswe tried to face openly and honestly,and posed strategic and tacticalchallenges that required patienceand cooperation from all involved.

Yet from this effort, we embraceda new approach that offers a higher,more predictable level of supportfor organizations that demonstrateeffective performance againstshort- and longer-term outcomes.

Many challenges we faced duringour journey are shared by other nonprofits. I often am asked whetherthe process of reinventing the foun-dation’s grant-making approach wasworth the effort. My answer is a resounding yes, but our experienceoffers several lessons:

■■ Build and nurture open lines ofcommunication: The process of re-defining our grant-making strategiesand building an effective infrastruc-ture was one of reinvention, so I amproud we maintained grant making

without interruption. Yet as we continued to award and

manage grants, the criteria andframework by which grant requestswere processed remained a work inprogress. This made it confusing forsome applicants to understand howthey fit within our new framework —or if they fit at all.

It proved challenging for us aswell, and vitally important, there-fore, to maintain open lines of com-munication with all grantees. We letthem know what we knew — and insome cases, what we didn’t — as wegathered and processed information.

We have now begun the process ofarticulating these changes so that or-

ganizations whose work we so valuewill better understand our strategies.

■■ Remain mission-focused: Ourboard struggled with the difficultquestion of whether increasing ourgrant-making budget today wouldmean having less to spend tomorrow.Given that we exist to improve andtransform health and well-being,they decided that making bigger investments in truly effective solu-tions will strengthen the ability oforganizations to do the work thatadvances our mission.

■■ Embrace learning: Our journeywas transformed by the words ofauthor and Cleveland native MarioMorino, who in his 2011 book “Leapof Reason,” synthesized the chal-lenges and opportunities we faced:

“We need to rethink, redesign,and reinvent the why, what, andhow of our work in every arena. Weneed to reassess where we have thegreatest needs so we can apply ourlimited resources to have the mostmeaningful impact. We need to bemuch clearer about our aspirations,more intentional in defining ourapproaches, more rigorous in gaugingour progress, more willing to admit

mistakes, more capable of quicklyadapting and improving — all withan unrelenting focus and passionfor improving lives.”

Mr. Morino’s words proved inspi-rational to us — so much so that weadopted many concepts from hisbook for our reinvention as a learningorganization.

When organizations and individ-uals adopt a spirit of learning,everyone wins. Learning can occuron many levels, from building na-tionally accepted learning conceptsinto an organizational frameworkas we did, to less formal approachessuch as soliciting ideas and engag-ing others within your circle, identi-fying your strengths, and recogniz-ing areas that need improvement.

■■ Maintain transparency: Alwaysbe open and honest with stakehold-ers, and acknowledge that you maynot have answers right away. Theywill respect you for your honesty, andit will forge stronger ties and more mutually beneficial relationships. ■■

Denise San Antonio Zeman is presi-dent and CEO of Saint Luke’s Foundation of Cleveland.

DENISESANANTONIOZEMAN

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PHILANTHROPY

Tech: Local firms help nonprofits reach outinteractive leap.

Ron Cass, founder and presidentof Big River, which last month received a $250,000 investmentcommitment from JumpStart Inc.,said his online fundraising platformfor nonprofit organizations focuseson building relationships.

“That’s our secret sauce, so tospeak,” said Mr. Cass, a perennialentrepreneur and volunteer boardmember for educational nonprofitsover the years.

“The closer an organization can get to connecting that donoremotionally and intellectually towhat their dollar does will makethem more successful,” he said.“What you are allowing a donor todo then is become a part of themission. They are not giving money;they are taking action. That is anemotionally satisfying experience,and we enable organizations toadd that ability to their onlinepresence immediately.”

Mr. Cass said Big River helpsnonprofits increase online givingby delivering the most effective appeal to the potential donor atthe right time. The software supports all donor transactions,including events, recurring giving, sponsorships and specialcampaigns.

Offering a different type of sup-port is BoardMax, an online boardmanagement portal from Stream-Link Software. It’s an interactivetech favorite at the CommunityFoundation of Lorain County andnearly 200 other organizationsthroughout Northeast Ohio and

nationally.“BoardMax is a tool that helps

the nonprofits communicate and collaborate more effectivelywith their board members andcommittee members,” said KevinFrench, a product director forStreamLink Software, which alsohas developed a grant manage-ment platform called AmpliFund.

Mr. French said the cost ofBoardMax is based on the amountof a nonprofit’s operating budget.He said a subscription can rangefrom $500 to $5,500 annually, butalso can result in cost savings related to efficiencies.

The Community Foundationwas one of the first adopters ofBoardMax in 2010.

“About 40% of our membersbring laptops or iPads to the boardmeetings to look at documentationinstead of bringing a printed-outboard packet,” said Mr. Frederick,the president and CEO. “It hasfundamentally changed how wecommunicate with the board, andit has put a lot of responsibilityback on the board members but ithas done it in a very efficient way.”

Technology at workSince adopting the technologies

of Big River and StreamLink, theCleveland Museum of Art hasbeen able to double its member-ship, increase online giving andreduce staff time and costs associated with communicationwith its board.

“BoardMax enables us to keepsthe communication lines open24/7 with our board and keep our

trustees up to date with things thatare going on here at the museumin real time,” said August Napoli,the museum’s deputy director andchief advancement officer, of thesoftware the museum has beenusing since January.

Big River’s web-based tool,meanwhile, allows museum staffto spend less time processing data.

“Because (the Cleveland Museumof Art is) free and open to the public,membership is an act of philan-thropy,” Mr. Napoli added. “Theuse of technology has really revo-lutionized our ability to quicklyprocess these transactions and freeup the fundraising professional tofocus on relationship development.”

At the United Way of SummitCounty, a website addition thisMarch made all volunteer oppor-tunities searchable in one location,said Michael Gaffney, vice presidentof marketing and communicationsfor the organization.

The virtual change has reducedthe amount of time to connect anindividual with an appropriatevolunteer interest from a “week totwo weeks down to what could bea couple of hours or a couple ofdays,” said Andrea Metzler, directorof volunteer services.

“Really the best part is that theyare able to create a profile forthemselves with their interestsand their availability which is hugefor most people that are trying tofit these opportunities into theirdaily lives,” she said. “Then thesystem will email them if a newopportunity becomes availablethat fits their profile.”

Convenience nothing to LOL atEase of use, especially in terms

of donor transactions, is criticalfor nonprofit relations, said BigRiver’s Mr. Cass.

“The way I look at it, many organizations have not been bene-fiting from the last 17 years of e-commerce,” he said. “Best prac-tices have emerged, tools haveemerged and platforms emerged,and a lot of that is unavailable tothe nonprofits.”

It doesn’t get easier than texting amonetary gift. This year, the Cleve-land Clinic raised more than $94,000through its mobile fundraisingtext-to-pledge program during itsChildren’s Hospital HeartThrobBall, said Bridget Andrews, directorof annual and special giving.

“It’s been so successful becauseduring the event people hear allthe great stories about the chil-dren … and they are inspired togive,” she said. “Once they makethat pledge at the event, we’re ableto follow up ... through email andfulfill that pledge afterward.”

That’s not the only high-tech,heartstring-pulling employed bythe Clinic. Since June 2011, 61 patients have created online personal fundraising pages, raising nearly $200,000 for the institution.

“Our patients are able to telltheir story about their ClevelandClinic experience, upload photosand invite family, friends andcoworkers to join them in sup-porting their particular ClevelandClinic cause,” she said. ■


IN BRIEFSight Center adds torolls of call contracts

Have a question about teacher licensing? Or maybe you’re lookingfor information about bus routes?

Soon, those and other questionsplaced to the Ohio Department ofEducation’s call center will be filtered by those working throughthe Cleveland Sight Center.

The Sight Center, which started itsoverall call center training programfive years ago, recently was awardedthe two-year, $990,000 contract.

A mix of part- and full-time workerswith work-limiting disabilities willhandle the calls beginning Dec. 14.Nine already have started to train, withplans in place to hire another eight.

This is the second such contractawarded this year to the SightCenter, which since July has beenthe clearinghouse for inquiries to 1-800-BUCKEYE, the call center forthe division of travel and tourism.

That contract, worth a little morethan $320,000 over two years, employs 11 people.

“The unemployment rate for people with disabilities is just sohigh. … These contracts really dorepresent a great pathway to employment,” said Jassen Tawil, director of assistive technology andretail services. Supportive servicesalso are available to call centerworkers, who often are transitioningback into the work force.

The Cleveland Sight Center within the past year earned preferred vendor status through thestate’s office of procurement, whichopened the possibilities to such contracts.



Three Program Areas, One Mission.

ResilientFamilies

Empowering Families to Succeed and ThriveWe catalyze and sustain opportunities to ensure that community resources meet families’ needs and empower parents to implement their vision for the health and well-being of their families.

Bringing Care Front and CenterWe catalyze and sustain opportunities to improve community health by promoting the health home model of care and reducing obesity.

Supporting More than Bricks and MortarWe catalyze and sustain opportunities to improve social conditions, improve physical environments and promote healthy community design in targeted neighborhoods.

Saint Luke’s Foundation of Cleveland, Ohio reinvests its resources to provide leadership and support for the improvement and transformation of the health and well-being of individuals, families and communities of Greater Cleveland.

To learn more about our grantmaking, call us at(216)431-8010 or visit saintlukesfoundation.org.

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PHILANTHROPY

Stepstone Academy

PLACESOFNOTEA look at Northeast Ohio’s interesting spaces

By TIMOTHY [email protected]

Rich Frank has big ideasabout how to break thecycle of poverty that leadsmany of Northeast Ohio’s

poorest residents to Guidestone —a local nonprofit that offers every-thing from assistance finding work,counseling for troubled youths tofoster care services.

The whole premise behind hisbold vision for Guidestone, anagency that until earlier this yearwas known as Berea Children’sHome & Family Services, is rootedin the notion that without a solideducation on which to build, theorganization can do only so muchto bring its clients out of the direcircumstances in which many ofthem were raised.

So, Guidestone got into the education business.

This fall, Guidestone opened apublic charter school, StepstoneAcademy, in Cleveland’s poverty-stricken Central neighborhood,which sits on the eastern outskirtsof downtown and is just a shortwalk from Guidestone’s Clevelandcampus on Carnegie Avenue. Theschool on East 32nd Street nearCedar Avenue is the first of whatMr. Frank envisions as several he

would like to open in Cleveland’surban neighborhoods.

“If we don’t impact the educa-tional attainment of kids in our urban environments, they don’thave a chance,” said Mr. Frank, theorganization’s CEO. “It doesn’tmatter how many benefits or services we offer them. It doesn’tmatter if we don’t give them an opportunity.”

The school, which serves about150 kindergartners and first-graders this year, was developedwith the help of Perry White, whofounded the Citizens Academycharter school in Cleveland in1999. The plan is to add a gradeeach year until the school reacheseighth grade.

Anticipating it would quicklyoutgrow its 10,000-square-footspace, Stepstone next fall plans toshift some of its students into aroughly 15,000-square-foot buildingon Carnegie it plans to renovateover the next three years at a costof about $1 million. Longer-termplans call for the construction of agymnasium.

The expansion would closelyconnect the Guidestone offices withStepstone to create a campus of sorts.

The intertwining relationship between Stepstone and Guidestoneoffers the burgeoning charterschool the potential to stand outamong its peers, Mr. Frank said.Many of the students and their parents already frequent Guide-stone for its bevy of services, andStepstone allows the organizationto cover the whole spectrum.

“There are a lot of synergies takingplace when you’re strengtheningthe whole family,” he said. “I don’tmean that to sound cliché, butwe’re giving them something tohang on to. At the end of the day,it’ll be good for their kids and prob-ably good for them, too.”

In the classrooms, students workin small groups with teachers andindividualized lesson plans loadedonto an arsenal of laptops, whichcollect data and track their progress.

“That immediate feedback ofhow the kids are doing, that wholedata-driven piece is so important,”said Susan Hyland, Guidestone’sassistant vice president of earlychildhood and support services.“Between the children and theirfamilies, this is all driven for success. These kids will go to

ON THE WEB: Check out more photos of Guidestone’s new charterschool, Stepstone Academy, online atwww.CrainsCleveland.com/Stepstone.

college and have the academicpreparation to do that.”

Mr. Frank admits he’s got a loftyvision to create a high-performingnetwork of charter schools. If Step-stone is successful, he sees the potential to take over fledglingcharter schools in the city. But atthe moment, he’s satisfied to seethis one up and running and with,at least so far, good results. Theschool’s success also will dependon how well Guidestone can raise

money to support the school,which receives about half the public funding the city’s publicschools do.

“I’m on cloud nine with the establishment of this, but my hopeis we can build a strong chartercommunity that works in concertwith Cleveland public schools and together we bring back a qualityeducation to the city of Cleveland,”Mr. Frank said. “We all have skin inthis game.” ■

JANET CENTURY

ABOVE: Social worker Kerry Copes (left) and teacher Molly Gorie work with students at Stepstone Academy. BELOW: Teacher Kelly Krupa gets a big hug.



LARGEST OFFICE LEASESRANKED BY SQUARE FEET

Rank BuildingAddressCity, Zip Square feet Tenant Tenant representative Landlord representative

1 KeyBank Center 800 Superior Ave.Cleveland, 44114 134,816 AmTrust Financial Services Inc. NA Guggenheim Commercial Real

Estate Group

2 KeyBank Center 800 Superior Ave.Cleveland, 44114 133,917 GMAC Insurance NA Guggenheim Commercial Real

Estate Group

3 29825 Fountain Parkway Solon, 44139 100,000 MRI Software CB Richard Ellis NA

4 University Plaza 1836 Euclid Ave.Cleveland, 44115 85,000 Cleveland State University NA Liberty Development Co.

5 1100 Superior Ave. Cleveland, 44114 54,066 First American Title Insurance Co. CB Richard Ellis NA

6 Rock Run North 5700 Lombardo Center DriveSeven Hills, 44131 51,343 Sedgwick Claims Management Services Inc. CB Richard Ellis CB Richard Ellis

7 Richmond Office Park 4781 Richmond RoadWarrensville Heights, 44128 42,922 Marcus Thomas Newmark Grubb Knight Frank Geis Cos.

8 S. Water St. and Erie St. Kent, 44240 42,756 Ametek Inc. CB Richard Ellis NA

9 30455 Solon Road Solon, 44139 42,000 Reimer, Arnovitz, Chernek & Jeffrey Co. LPA Cresco Real Estate Ostendorf-Morris Co.

10 1100 Superior Ave. Cleveland, 44114 41,627 Brand Muscle Inc. Jones Lang LaSalle NA

11 3585 Ridge Park Drive Akron, 44321 40,000 Health Care Financial Services Inc. NA CB Richard Ellis

12 Midtown Technology Park 6700 Euclid Ave.Cleveland, 44103 35,000 DeVry University, Chamberlain School of Nursing Cresco Real Estate Ostendorf-Morris Co.

13 Spectrum Building 6060 Rockside Woods Blvd.Independence, 44131 34,315 Honeywell International Ostendorf-Morris Co. Dalad Group

14 6200 Oak Tree Blvd. Independence, 44131 34,221 Dental One Inc. CB Richard Ellis Newmark Grubb Knight Frank

15 Reserve Square 1701 E. 12th St.Cleveland, 44114 33,025 Cuyahoga County Central Services NA Ostendorf-Morris Co.

16 Bainbridge Park Phase II 31500 Bainbridge RoadSolon, 44139 31,200 Sagequest Newmark Grubb Knight Frank Newmark Grubb Knight Frank

17 Park Center Plaza II 6150 Oak Tree Blvd.Independence, 44131 30,127 GSA Jones Lang LaSalle CB Richard Ellis

18 Park Center Plaza I 6101 Oak Tree Blvd.Independence, 44134 28,684 GSA Jones Lang LaSalle CB Richard Ellis

19 150-200 Euclid Ave. Cleveland, 44114 28,000 21st Century Computers Inc. CB Richard Ellis CB Richard Ellis

20 Southport 8333 Rockside RoadValley View, 44125 27,816 NAS Recruitment Communications LLC Newmark Grubb Knight Frank NA

21 1100 Superior Ave. Cleveland, 44114 27,033 Osborn Engineering CB Richard Ellis Kowit & Passov

22 3000 Aerospace Parkway Brook Park, 44142 26,892 Vantage Systems Inc. Jones Lang LaSalle NA

23 Summit Office Park 4 Summit Park DriveIndependence, 44131 26,600 Nation's Lending Corp. Ostendorf-Morris Co. CB Richard Ellis

24 6070 Parkland Blvd. Mayfield Heights, 44124 25,370 Materion Corp. NA Davis Development Group Inc.

25 Reserve Square 1701 E. 12th St.Cleveland, 44114 25,083 Cuyahoga County Central Services NA Ostendorf-Morris Co.

26 Commerce Park 4 23240 Chagrin BoulevardBeachwood, 44122 24,881 Howard, Wershbale & Co. NA Munsell Realty Advisors Inc.

27 Promenade at Belden 4080 Belden Village St.Canton, 44718 24,675 Fin, Feather & Fur Outfitters NA EMMCO Corp.

28 Landerbrook Corporate Center II 5910 Landerbrook DriveMayfield Heights, 44124 23,464 On X USA LLC CB Richard Ellis King Group

29 201 W. Erie Ave. Lorain, 44052 22,500 Mosaic School NA United Property Management

30 3737 Embassy Parkway Akron, 44333 21,826 Hanna Campbell Powell Jones Lang LaSalle NA

31 Highland Business Park 4520 Richmond RoadCleveland, 44128 21,751 ITT Educational Services Inc. Jones Lang LaSalle Newmark Grubb Knight Frank

32 Keith Building 1621 Euclid Ave.Cleveland, 44115 21,536 Renner, Otto, Boiselle & Sklar LLP PlayhouseSquare Real Estate Ostendorf-Morris Co.

33 Dressler Plaza 4746 Dressler RoadNorth Canton, 44718 21,497 National College Newmark Grubb Knight Frank Kowit Passov

34 Frost Road Business Center II 525 Frost RoadStreetsboro, 44241 20,250 Federal Reserve Bank of Cleveland Ostendorf-Morris Co. Geis Cos.

35 Landerbrook Place 5915 Landerbrook DriveMayfield Heights, 44124 20,170 State Industrial Products Corp. NA NA

36 One Cleveland Center 1375 E. Ninth St.Cleveland, 44115 19,855 Britton Gallagher Newmark Grubb Knight Frank 1375 Optima LLC

37 One Cleveland Center 1375 E. Ninth St.Cleveland, 44114 19,200 Grant Thornton Allegro Realty Advisors Ltd. NA

38 Akron Centre Plaza 50 S. Main St.Akron, 44308 19,000 YMCA NA Jones Lang LaSalle

38 Plaza South 7261 Engle RoadMiddleburg Heights, 44130 19,000 NA Newmark Grubb Knight Frank Plaza South Consolidated

40 Westlake Centre 24650 Center Ridge RoadWestlake, 44145 18,500 AmeriGas Jones Lang LaSalle NAI Daus

41 5531 Canal Road Valley View, 44125 17,843 Support Care Inc. Newmark Grubb Knight Frank NA

42 3700 Park East Drive Beachwood, 44122 17,578 Radisphere National Technology Group Newmark Grubb Knight Frank Ostendorf-Morris Co.

43 334 Euclid Ave. Cleveland, 44114 17,500 Convention & Visitors Bureau of Greater ClevelandDBA Positively Cleveland Newmark Grubb Knight Frank NA

44 Najm Square II 3120-22 Euclid Ave.Cleveland, 44115 15,000 Newpoint Education/Invictus High School NA Najm Real Estate Inc.

45 1317 Euclid Ave. Cleveland, 44115 14,858 Dwellworks LLC CB Richard Ellis Playhouse Square Realty

Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to ourlists and will include omitted information or clarifications in coming issues. Source: Information provided by CoStar Group Inc. www.costar.com and the tenant and landlordrepresentatives. Information is for Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne countiesfor Oct. 1, 2011, through Sept. 30, 2012 and includes new leases.

RESEARCHED BY Deborah W. Hillyer


suppliers working on the new 787,according to Michael Heil, presidentand CEO of the Ohio Aerospace Institute.

“Ohio has played a big role inhelping create the Dreamliner,” hesaid. “It should mean more jobs andmore revenue for the Ohio compa-nies that are supplying Boeing.”

Parker Hannifin Corp., a MayfieldHeights-based producer of motionand control technology, has beenon the front lines of the Dreamliner’sdevelopment.

The company, a legacy tier 1 supplier for Boeing, has assumed agreater role with the 787 than withplanes in the past. Apart from theother work Parker does for Boeing, thecompany now completes assemblyof the aft strut fairing module,which is a hydraulic system sub-assembly, then ships them to Boeingfor installation.

As Boeing has moved to a leaneroperation, it has tasked suppliercompanies such as Parker with takingon parts sourcing and assemblyfunctions, giving Parker more responsibility — and influence —over the plane, according to JeffRolf, vice president for business development of commercial air-frames for Parker Aerospace.

It’s a role Parker relishes, accordingto Sergio Von Borries, vice presidentof Boeing business for Parker Aero-space.

“We want to be integrators,” hesaid. “We want to be aggregators.”

Links in the chainParker’s greater role also holds

the potential of more opportunityfor Ohio manufacturers to be part ofthe Dreamliner supply chain.

“It’s natural to work with folks inthe area,” Mr. Rolf said. “A lot of ourfacilities will have next-tier suppli-ers in the same communities.”

For example, Parker Aerospace’sElyria plant contracts out machining,anodizing and heat treatmentprocesses for its fuel, hydraulic andwater pumps to companies in Elyriaand elsewhere in Ohio, Mr. Rolf said.

Across the state, a number ofcompanies have staked their claimsin the supply chain.

GE Aviation in Evendale, nearCincinnati, since 2004 has been involved in designing and develop-ment testing of the GEnx engine forthe Dreamliner. Deb Case, a mediarelations representative for GE Aviation, said it makes ducts andtubes for the engine at a plant inDayton and performs final assemblyand production in Peebles, whichalso is near Cincinnati.

Cleveland-based Eaton Corp.produces the main engine fuel pumpsused in the GEnx engines at its Euclidplant as well as a number of othercomponents for the plane, saidEaton spokesman Scott Schroeder.

And aluminum producer AlcoaInc. makes forgings for the plane atits forgings and extrusions plant inCleveland, said Kevin Lowery, di-rector of communications of globalrolled products for Alcoa.

Steady ascentOhio is particularly well positioned

to serve the Dreamliner, Mr. Heilsaid, because the plane is 50% com-prised of composites rather thanlargely constructed with metals. AndOhio is known for its high concen-tration of polymer companies, he said.

Boeing’s move to compositesmarks a greater commercializationof the technology and means moreaircraft manufacturers likely willfollow, Mr. Heil said.

Boeing currently is deliveringfour to five planes a month, butplans to boost that number to sevena month by the end of 2012, Mr. VonBorries said. Boeing expects to deliver 10 planes a month by theend of 2013, according to a news release the company issued Nov. 12.

Andrew R. Thomas, associateprofessor of international businessat the University of Akron and authorof “Soft Landing: Airline IndustryStrategy, Service, and Safety,” saidthe moves toward efficiency at Boeing— and at other aircraft manufacturers— are positive developments forOhio and the aerospace industry.

“This notion of efficiency that’sbeen sweeping the industry is real-ly pushing the manufacturers andtheir suppliers to provide efficien-cies at all levels in that process,” Dr.Thomas said. ■


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STO president Jim Liberatore, inan email, said, “We have had variousparties interested in purchasingSTO almost since the day welaunched in 2006 and those partiesremain interested. I cannot com-ment on any projected timing oroutcomes of any of those conversa-tions.”

A phone call to Indians presidentPaul Dolan was not returned byCrain’s deadline last week.

Big money? YES, it isNow might be a good time for the

Dolans to sell. Fox Sports’ parent,News Corp., has been opening itswallet to expand its sports cablereach. Late last month it acquiredfor $1.5 billion a 49% interest in theYES Network, which is owned inpart by the Steinbrenner family thatowns the New York Yankees base-ball team. News Corp. can acquirean 80% controlling interest in threeyears. The purchase puts a value onYES of $3 billion.

With that deal, Fox Sports grew itsroster of regional sports networks to20. At the same time, it is expectedto roll out a national sports cablenetwork to rival the dominantESPN. Mr. Fang said it will be calledFox Sports 1.

Sports networks remain highlyprofitable. At the same time, theprice of sports programming hassoared in recent months as networksseek to lock in long-term deals. Lastmonth, Fox Sports West and the LosAngeles Dodgers agreed to a 25-year broadcast rights deal that willpay the team at least $240 million ayear.

Even the San Diego Padres,which operate in a market that iscomparable to the Indians’ market

in size, last year signed a 20-yeardeal with Fox Sports San Diegoworth $60 million a year.

“There is a rush to lock up sportsrights for the long term because theprices have been escalating dramat-ically,” SNL Kagan’s Mr. Baine said.“That’s all happened in the last several months. It shows a level ofalmost panic that (a network fearsit) will be stuck without a team.”

DVR-resistant viewersMr. Baine said as viewers increas-

ingly use digital recorders and onlineoptions to choose when they’ll watch,most television programming is losing its value to advertisers, whowant to know their ads are seen in atimely fashion. But that’s not thecase with sporting events, whichhave retained — and are expectedto retain — live viewers.

Mr. Liberatore would not com-ment on the broadcast rights dealbetween the Indians and STO.However, fangraphs.com, a sportswebsite, estimates the agreement tobe on a year-to-year basis, and putsthe current price at $30 million ayear.

Part of the allure of the deal forthe Dolans could be the opportunityto use some money to acquire playersto build the baseball team.

“It will be tough to turn that money down, especially with theDolans trying to get some freeagents,” Mr. Fang said.

In addition to the Indians, Sports-Time Ohio is the cable home of thebaseball team’s minor league affili-ate the Columbus Clippers and avariety of college sports events, in-cluding Mid-American Conferencecollege football and baseball andHorizon League basketball. It fillsout a 24/7 broadcasting schedule

STO: Networks value team content continued from PAGE 1

with a variety of live action, tapedand studio sports programs.

STO reaches 2.8 million house-holds in northern and central Ohioand in Pennsylvania border commu-nities, with another 4 million homesreceiving everything but the Indiansgames.

Fox Sports Ohio has more than 5million households in Ohio, Ken-tucky, Indiana, western Pennsylvania,western New York and West Virginia.Cleveland Cavaliers basketball andCincinnati Reds baseball games topFSO’s live-action roster. ■


Dream: Many Ohio firmssupplying aerospace field TV COSTS GOING UP

A look at some of the most recent local television dealssigned by Major League Base-ball teams, as the Dolan familyappears to be on the verge of asale of their regional sports net-work, SportsTime Ohio:

Los Angeles Dodgers: Team reportedly will sign a deal to staywith Fox for between $240 millionand $280 million per season.

San Diego Padres: Before the2012 season, signed with FoxSports San Diego for $1.2 billionover 20 years.

Los Angeles Angels: Signednew deal last December with FoxSports West for $2.5 billion over 17years.

Houston Astros: Agreed withComcast SportsNet Houston, whichlaunched in October, on a $3.2 billion deal over 20 years.

Texas Rangers: Re-upped withFox Sports Southwest late in 2010for $1.7 billion over 20 years.

SOURCE: FANGRAPHS.COM; CRAIN’S RESEARCH



A nationwide audience of executives and business owners are reading the inaugural issue of SHALE Magazine... are they seeing your company’s ad?

SHALE Magazine is here

MARCH 4Ad close: Jan. 31

Materials Due: Feb. 7

JUNE 3Ad close: May 2

Materials Due: May 9

SEPTEMBER 2Ad close: Aug.1

Materials Due: Aug. 8

DECEMBER 2Ad close: Oct. 31

Materials Due: Nov. 7

ADVERTISING INFORMATION:Contact Nicole Mastrangelo at 216-771-5158 or [email protected]

Don’t miss your chance (again) to reach a powerful audience of businesses that are leading the growth of shale drilling, in the Utica and nationwide.

NEXT ISSUE DATES:

By JAY [email protected]

Construction workers are bringinginto focus the look of the ClevelandMedical Mart & Convention Centerrising on the city’s Mall. Less clear,though, is whether the meeting andtrade show complex will go by thatname by the time it’s ready to openin 16 months.

Jim Bennett, a former McKinsey& Co. consultant hired last monthby developer MMPI Inc. to overseethe complex, has been soliciting thethoughts of community and medicalindustry leaders as he works on astrategy to achieve the greatest bangfor the buck from the county’s $465million investment in the project.And what he’s hearing is that “medicalmart” may not be the right name to

put over the building’s entrance forpromoting what will go on inside.

“I think the convention center isreally going to be a winner,” Mr.Bennett said during a meeting withCrain’s editorial board last Monday,May 14. “That’s three-quarters of thesquare footage, and that’s where theeconomic impact is.”

At the same time, Mr. Bennettsaid MMPI is rethinking the statusof the medical mart in its marketingof the complex and the med martname itself. The reconsideration isbased on feedback he’s receiving ashe meets with various constituen-cies interested in the project, whichis moving away from an early focuson single-vendor showrooms.

Picking up a brochure headed“Cleveland Medical Mart & Conven-

$2.00/MAY 21 - JUNE 3, 2012

Entire contents © 2012 by Crain Communications Inc.

Vol. 33, No. 21

SPECIAL SECTION

An updateto our2010 list■ PagesW1-W15

NEW

SPAP

ER

No print edition May 28Crain’s will not publish a print edition on

Monday, May 28, due to the Memorial Day holiday.

Throughout our hiatus, though, be sure tocheck www.CrainsCleveland.com for the latest business news and blogs.

NOTICE TO READERS

Canton officials roll out red carpet for shale industry players

Forest Cityoverdue onTerminalTower loanDeveloper houses 500workers in city iconBy STAN [email protected]

A $38 million loan secured by Terminal Tower, the Public Squareskyscraper the Guide to ClevelandArchitecture calls “the landmark ofthe city,” is overdue.

How that debt will be resolved bythe building’s owner, real estate giantForest City Enterprises Inc. — whichhas its headquarters and more than500 employees in the 52-story struc-ture — remains to be seen.

The loan matured April 1 and wasassigned April 20 to so-called “spe-cial servicing” with CIII Special Ser-vicing of Irving, Texas, CuyahogaCounty land records show. Compa-nies such as CIII work to maximizerecoveries from distressed loans onbehalf of debt holders.

Jeff Linton, spokesman for ForestCity, said the company is “workingwith the special servicer to come toan acceptable resolution on it.” Hedeclined to outline what Forest Cityhopes to obtain in the talks with CIII.

Land records show Terminal TowerSPE LLC, the corporation Forest Cityuses to own the tower, received theloan in 2005; the loan subsequently

Chesapeake began drilling atits first horizontalrig in StarkCounty in earlyMay and shouldcomplete its wellby early to mid-June, companyofficials say. STEPHEN HERRON

‘Utica Capital’ already seeing influx of businessesBy DAN [email protected]

Cleveland can have its Rock andRoll Hall of Fame and Museum.Canton aims to be the capital of awhole different kind of rock — theenergy-rich Utica shale — and thecity south of Akron that for decadeshas been economically off key sud-denly is pickin’ and grinnin’.

Even those leading the charge can’tkeep up. Although they can list quitea few newly arrived businesses, officials at the city and the CantonRegional Chamber of Commercedon’t know exactly how many shalegas-related companies already haveset up shop in and around Canton.Businesses sometimes pop up beforecity and chamber representativeseven know they’re looking for space,

STAN BULLARD

A special servicer has been assigned to the loan on Cleveland’s iconic TerminalTower.

MMPI: Med martidentity couldbe reimagined Emphasis will be placed on convention center,where project’s greatest economic impact lies

See IDENTITY Page 31

See CANTON Page 30

INSIDE: A new database is aimed atproviding easier access to the region’sshale gas supply chain. Page 3

officials say.But no one is complaining, because

the businesses still are coming, andthere is plenty of prospecting left todo among other companies lookingfor a place to land atop the Uticashale.

“From an economic development

See TERMINAL Page 34

1 www.SHALEmagazine.comwww.SHALEmagazine.com December 2012

Waste Water?Will recycling efforts slake drillers insatiable thirst?

Regulator RecruitmentOhio begins its search for wellinspectors to keep up with drilling

Fight for RightsThe end -game for mineral

rights leasing?

Lead Advertiser

MIDSTREAM INFRASTRUCTURE—THE INDUSTRY’S TOP PRIORITY IN 2013

Here comes the...

7www.SHALEmagazine.com

Get ready — Eastern Ohio will spend 2013 engulfed in a massive build-out to support a shale gas industry that many folks hope will forever change its economic landscape. From the development of midstream infrastructure like gas pipelines and processing plants, to the construction of giant steel mills,

operations to keep drillers supplied, nearly every town in the region is boasting of new investments. At the epicenter of much of this activity is Youngstown, the site of V&M Star’s highly publicized $700 million investment in a new steel mill and related processing facilities – and that’s not the whole story there, just the biggest so far.

What’s

NEXT?

Brookfield: TMK-IPSCO / $10 million / 50-120 jobs / Oilfield services facility

Canton: Chesapeake’s headquarters in Louisville (just east of Canton)

Carrolton: Current capital of drilling in Ohio. Approximately 150 drilling permits issued for the county since the beginning of 2011

East Liverpool: U.S. Silica / Sand transport facility

Marietta: Marietta College, enrollment in petroleum engineering rises from 250 to 400 students in 2012

Massilon: Baker-Hughes / 700 jobs / Oilfield services

Youngstown: Exterran / $13 million plant / 100 jobs / Oil and gas drilling services :: V&M Star / $700 million / 350+ jobs / Steel mill

Zanesville: Halliburton / $35 million to $50 million (estimated) / 300+ jobs / Transportation hub

7

6 24

8

5

3

1

Canton

Massilon

Carrolton

East Liverpool

Youngstown

Brookfield

Zanesville

Marietta 1

2

3

4

5

6

7

8

By Tim Francisco

Houston-based Exterran, which in 2011 reported selling $1.2 billion worth of gas processing and handling equipment, says it will soon begin hiring about 100 people to staff a 65,000-square-foot manufacturing plant in Youngstown. The company’s head of global manufacturing, Sean Clawges, says he’ll be moving back from

native of nearby Warren. Mr. Clawges predicts the Exterran facility will double in size in the coming years and do business with other local companies, from

“We are currently in the process of setting up partnerships with local companies for these services and commodities,” said Mr. Clawges at a recent shale gas event, noting that he was happy to come home, especially with the new regional investments in tow.

Stark’s reality Canton’s been the Ohio home of Chesapeake Energy so far, and the Hall of Fame city will still be close to the Utica’s biggest driller when Chesapeake moves to new digs in nearby Louisville in 2013. But as the self-proclaimed “Utica Capital,” Canton is

of new companies in 2013, especially

drawn there to serve Chesapeake and other drillers, says David Kaminski, director of energy and public affairs for the Canton Regional Chamber of Commerce. Canton City Council, he noted, has approved incentives to help bring a $5 million, 24,000-square-foot General Electric oil and gas facility to the city’s Mills Business Park

expected to initially employ about 30 people to serve Utica drillers.

facility in the park, according to Mr. Kaminski. “These are examples of the activity we anticipate,” Mr. Kaminski said. “Other opportunities are in the works and some will come to bear fruit.” Bob DeHoff, chairman of development for North Canton-based DeHoff Realtors, the developers of the 140-acre Mills Park, says four companies, all related to shale servicing, are expected to inhabit the park by the end of 2013. His company has also leased about 50,000 square feet of space this year to smaller companies related to

area on Interstate 77 (in terms of proximity to drilling) and this is

attractive to these companies,” Mr. DeHoff said. Mr. DeHoff said Stark County’s residential rental market is

company executives are purchasing homes in the area. In Louisville, just east of Canton, Chesapeake is building its

Park. In October, Keith Fuller, senior director of government affairs for Chesapeake, told Louisville City Council that the site likely

maintenance facility.

Board, said the Chesapeake project, as well as the construction of Baker-Hughes’ headquarters in Massillon, are the biggest developments slated for Stark County in 2013.

company, plans to build a regional facility in Massillon that will employ 700 to service shale gas exploration companies in the Utica and Marcellus plays. Baker-Hughes’ plan for the Massillon site includes a bulk cement plant, a wireline operation to provide drillers with down-hole tools and controls, truck bays and possibly a plant to make specialized mud for drillers, said spokeswoman Pam Easton. The company plans to complete the project by late 2013.

All told, about $40 million will be spent to

construct the Chesapeake and Baker-Hughes facilities, said Mr. Paquette, who added that after studying the industry for more than two years, he still can’t fully predict its impact on the region. “I don’t think we can even imagine what it will do for us,” Mr. Paquette said.

A strong midstream current Some of the biggest investments announced for the Utica region so far don’t involve steel mills, service companies or even drillers’ headquarters. A handful of companies have already announced hundreds of millions of dollars worth of midstream development, which includes the pipelines, processing facilities and other infrastructure drillers will need to get their gas to market. While plants

will be scattered across the region, but equally important to the shale industry’s success. NiSource Midstream Services of Texas has teamed up with Houston-based Hilcorp Energy, one of the nation’s largest privately held exploration companies, to invest $300 million in Utica

continued on page 41

A lone, old pumpjack guards the site of Chesapeake’s planned Ohio headquarters.

Granted, the company’s revenuetook a huge hit in mid-2011, when itsold its two biggest BC30 productlines to Schiff Nutrition InternationalInc. of Salt Lake City for $40 millionin cash. Those products, dietarysupplements marketed under theSustenex and Digestive Advantagebrands, accounted for about two-thirds of the company’s revenue,which Ganeden does not disclose.

However, Ganeden is movingquickly to replace that revenue withwhat company officials say is amore profitable licensing business.

Selling off its dietary supplementbrands relieved Ganeden of a bigadvertising burden, Mr. Lefkowitzsaid. The company was spending20% to 30% of its supplement saleson advertising for those brands,which it was selling and marketingon its own, he said. Ganeden nowspends less than 5% of its revenueon advertising, he added.

“The value of a licensing dollar is superior to the value of a retail dollar,” Mr. Lefkowitz said.

The new strategy does requiremore product testing, which hasmade it all the more important forGaneden executives to have conve-nient access to the microbiology labin Northeast Ohio. Mr. Bush notedthat he flew to Miami 16 times in 2011.

“Developing a food is far morecomplicated than putting somebacteria into a capsule,” he said.

Ganeden, which employs 17 peo-

ple, has no immediate plans to addstaff to run the new microbiologylab, which contains a lot of auto-mated equipment.

Healthy preoccupationWorldwide, people buy about $32

billion of probiotic products everyyear, said Mr. Bush, who also is vicepresident of the International Pro-biotics Association of Zurich,Switzerland. Today, yogurt prod-ucts account for a large majority ofthose sales.

In the United States, the popular-ity of probiotics has grown substan-tially over the last two years, accordingto a report from Spins LLC, aSchaumburg, Ill., company thattracks sales and trends in the naturalproducts business. U.S. sales of pro-biotic products totaled $2.25 billionin the 12-month period that endedJuly 7, 2012, up 33% from $1.69 billion during the like period a yearearlier and up 79% from $1.26 billion the year before that.

The popularity of supplements ishelping drive some of that growth,but overall awareness about probi-otics — in food and other products— is increasing, said Kerry Watson,a Spins natural products specialistwho wrote the report.

Plus, people generally are becomingmore interested in being healthythese days, Ms. Watson said.

“There’s a mass movement ofpeople … taking their health intotheir own hands,” she said. ■

Ganeden: Consumers warmto probiotic product benefits

Timken: Various factors make for a tough go in steel business


nearly 5.4 million shares of Timkenstock — about 5.7% of the company’sshares outstanding, according tohis Nov. 19 filing with the Securitiesand Exchange Commission. Hewants Timken to spin off its steelbusiness, leaving it as a bearingsand industrial gear and equipmentmaker and creating a stand-alonesteel company.

Mr. Whitworth is the muscle behind a proposal, put forth by oneof his home state’s largest institu-tional investors, the California StateTeachers Retirement System (Cal-STRS), asking Timken shareholdersto recommend the divestiture to thecompany’s board and management.

But CalSTRS brings only 0.4% ofTimken’s stock to the table. Mr.Whitworth alone already controlsmore Timken stock than even thefounding family’s Timken Founda-tion, which owns about 5.3% of thecompany’s shares outstanding.

Both Mr. Whitworth and CalSTRSsay in their SEC filings that theymay buy more Timken stock as partof their effort to bring about thechange in structure. In that regard,CalSTRS is no small friend to haveas backup, since it has nearly $155billion in assets.

Diverse or divergent?

Mr. Whitworth and CalSTRS arguethat Timken’s steel and other busi-nesses are too diverse. That diversity,they say, is causing the market todiscount the company’s stock price,is leaving it with fewer analysts thanmight otherwise follow two sepa-rate companies, and is denying in-vestors a pure play.

The two investors “believe thatthe market significantly undervaluesthe company due to its combina-tion of two incongruent core busi-nesses. … We believe that a spinoffof the steel business would funda-mentally and positively change theway the market values the overallbusiness,” Mr. Whitworth and Cal-STRS said in SEC documents.

Mr. Whitworth contends the twonew companies both could have“Timken” in their name, and bothwould be headquartered in Canton.

Timken thinks it’s a bad idea. Inpublic comments the company issued last Wednesday, Nov. 28,Timken said it met with representa-tives of Mr. Whitworth’s RelationalInvestors fund, considered the pro-posal and decided against sellingthe steel operations.

“As a market leader in high-quality

engineered steel products, our steelbusiness leverages the same exper-tise and know-how that we applyacross our businesses,” Timken CEOJames Griffith said in a statement.

“We have significant technology,cost and revenue synergies betweenour bearing and steel business aswell as diversification benefits incontinuing to operate under ourcurrent structure.”

Ultimately, it looks as thoughshareholders will decide the matter.They’re set to vote on the proposalput forth by CalSTRS at the com-pany’s annual meeting next year,which has not yet been scheduled.

Mr. Lustgarten said there are afew reasons why it might not makesense for Timken to split itself in two.

“You’d lose all the synergies youget in the (combined business units)and you’d then have two separatecorporate structures,” Mr. Lust-garten said, noting that a split wouldmean supporting two managementteams, accounting departmentsand other administrative functions.

Timken reported revenues of$3.9 billon for the first nine monthsof this year. About $1.4 billion ofthat came from its steel business,and the rest was generated by salesof bearings, gears and other engi-

continued from PAGE 3 neered products. Revenues were about the same as

in the first three quarters of 2011, butthe company cut costs and increasedits overall earnings by nearly 22%, to$420.2 million, in the latest nine-month period.

Mr. Lustgarten said he’s beenhappy with the performance ofTimken’s management in recentyears, as it has worked to improvethe company’s profitability. He saysthe market has been slow to recog-nize or reward that progress — butnot just at Timken.

“The renaissance that’s going onamong American manufacturingcompanies has largely gone unre-warded” by investors, he said, evenas companies such as Timken,Eaton Corp. and others have seentheir fortunes improve in recentyears. Mr. Lustgarten said funda-mental performance eventually willwin the day, but longtime marketperceptions of underperformingcompanies or entire industries taketime to change.

Steel is toughThe steel business, in particular,

has seen choppy seas of late as U.S.companies have had to deal withwaves of competition from China,an ebb in European sales, and var-ied and sometimes unpredictableend markets in the United States.

Even companies in the same regions are contending with differ-ent challenges, depending upon thekind of steel they make and themarkets to which they sell. For instance, Timken last month laid off160 steelworkers in Canton and

probably will put between 300 and400 more workers on part-time furlough, said Bob Harper, vice pres-ident of United Steelworkers Local1123, which has 2,200 members andrepresents workers at Timken.

“The industry took a dive thissummer,” Mr. Harper said. “The European economies aren’t buildingbridges — they aren’t buildingnothing. … And the Chinese aredumping steel into the market, sothe whole industry is feeling it.”

The whole industry, perhaps, butnot every mill.

In Cleveland, ArcelorMittal steelworkers are not expecting any layoffs,even though there is often a slow-down at the end of the year, said USWLocal 979 president Mark Granakis.

While other ArcelorMittal plantsmight be slowing a bit, the Cleve-land Works is busy pumping outcoiled steel to automotive stampers,appliance manufacturers and otherhealthy end markets, Mr. Granakissaid. Further investments and newproducts expected to be rolled outat the mill should increase activitythere, he added.

“Although the company obviouslyis not doing terrific as far as ship-ments go — business is slow overall— our plant itself is doing fine,” Mr.Granakis said.

Timken is experiencing the sameslowdown as the steel industry gen-erally, but demand for productssuch as seamless steel tubing usedby oil and gas drillers, as well as forits other steel products, will cycle backupward and the company should bein a position to capitalize when thathappens, Mr. Lustgarten said. ■



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29,993 SF MULTI-TENANT RETAIL PROPERTY--$6,478,650.0027,425 SF MULTI-TENANT RETAIL PROPERTY--$3,441,400.00

3,114 SF RETAIL LAND LEASE PROPERTY--$1,357,300.00

FREE-STANDING INDUSTRIAL BUILDINGASKING PRICE $2,100,000.00

45,600 SF SINGLE-OCCUPANCY BUILDING6.4 ACRES OF LAND/22’ CLEAR

“2012—Hurry to Qualify for 1031 Tax-Free Exchange”

BROKERS WELCOME! CALL RICK JR. OR NATHAN FOR INFORMATION

(216) 219-0290—RICK JR. /(440) 364-4899—NATHAN(440) 951-1111/(440) 354-ORES--OFFICE

OLMSTED FALLSVACANT LAND

1.47 acres zoned. Professional/Multi-family. Public Bid. Permanent Parcel

281-17-015, Elm Street. Minimum bid$25,000, due Friday, December 7th

For more info, call 440-235-6264

Homeowners!County Valuation too high?

WJ Doyle & AssociatesReal estate appraisers

providing NE Ohio marketvalue opinions for 30yrs

216-381-58602012taxappeals.com

Downtown ClevelandOffice Space – ModernOne/Two offices available.Kitchenette, break room,

conference room. 12th floor withcity view. Excellent location.

Call Ryan Anderson216-664-1300 x351

Real Estate Auctions

www.bambeck.comBambeck Auctioneers Inc.

Bambeckk Auc t i oneers Inc .

Dec. 6 • 11:00 AM On-Site



5046 Turney Rd, Garfield Hts1-Story Office BuildingOnly $55,000 Minimum!

321 W. Exchange, AkronMortgage Foreclosure1 & 2 Story Office Building

400 Claremont Ave, AshlandCommercial Property

Near Ashland University

See Web Site For Details

CLASSIFIEDCCrraaiinn’’ss EExxeeccuuttiivvee RReeccrruuiitteerr

Assistant editorCrain’s Cleveland Business

Crain’s Cleveland Business seeks an assistant editor who will have pri-mary responsibility for the print publication’s page design functions us-ing the Quark pagemaking system. Strength in design and Quark skillsare a must. This editor also is the paper’s primary headline writer, so astrong news sense is critical. The position also involves writing storiesfor both our print and online publications, and could include beat cov-erage, so successful candidates should possess solid reporting skills.And the person in this position also is involved in producing our morn-ing email that is an aggregation of business news statewide. Experi-ence with the Saxotech content management system is a plus.

Please send page design and writing samples to editor Mark Do-dosh via email at [email protected], or by regular mail to 700W. St. Clair Ave., suite 310, Cleveland 44113.

ACCOUNT EXECUTIVECrain’s Cleveland Business is the premier source of businessnews across Northeast Ohio, producing a weekly, four-colornewspaper as well as a robust website, broad collection oftargeted e-newsletters and prestigious business networkingevents. Must be a team player and strategic thinker, as well asa hands-on developer and content producer who will lead in thecreation and execution of a wide variety of web/digital productsand projects.

Job Requirements:• Minimum of 5 years of outside sales experience • Excellent verbal/written communication skills • Ability to meet deadlines and handle multiple tasks with accuracy • Previous Internet/media sales • Ability to travel regularly to meet with clients in territory • Highly motivated, proactive and enthusiastic team player

Crain Communications offers a competitive salary, a generousbenefits package, profit sharing, and a friendly work environ-ment. This is a great time to join our organization -- a profitable,well established publishing leader.

To apply for this position please visit our website atwww.crain.com and search under the Careers section.

EXCAVATOR2003 Kobelco

SK250LC VI Excavator3,414 Hours. Full preventive maintenance

service performed at current hours.Priced to sell $85,000

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Want to Buy or Sella Business?

Free Seller Market AnalysisSee our listings at

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440-461-2202

BUSINESS SERVICEOWNERS

Submit your business card to promote your service.

To find out more, contactDenise Donaldson at 216.522.1383

For daily on-line updates, sign up @CrainsCleveland.com/Daily To place your Executive Recruiter ad

Call Denise Donaldson at 216-771-5172

THE BOOK OF LISTS

IT’S ALMOST HERE.... GET READY FOR

ADVERTISE IN NORTHEAST OHIO’S ONLY BOOK OF LEADS

2013


Partying like it’s 1999 — well, almost■ Northeast Ohio’s companies like to party.

Even at the recession’s peak, the region’sworkplaces didn’t altogether banish theirholiday parties. But as the recession’s griploosened, these same companies appear tobe spending more on their end-of-the-yearblowouts, according to research publishedthis month by the Employers ResourceCouncil, a human resources organizationin Mayfield Village.

According to the study, 73% of surveyed organizations are planninga holiday party for 2012, with thebulk of them — about 66% — bud-geting the same amount of moneyor more as last year for the bashes.In 2009, only about 38% of organi-zations had budgeted the same amountof money or more than they spent on 2008’srevelry.

“Even when budgets are tight, making theextra effort to host a holiday gathering orgive employees a small gift can really boostmorale,” said Margaret Brinich, ERC’s man-ager of surveys and research. — TimothyMagaw

Adding the ‘fab’ factor to pre-fabricated homes■ Prefabricated housing in the UnitedStates widely is regarded as the low-budgetway to build because of the efficiencies ofworking inside a factory rather than facingthe elements outdoors. However, Alexander

Kolbe thinks Americans need to move to amore European model for such dwellings ashigh-end offerings.

So, Mr. Kolbe and his wife, Michelle, recentlyformed Evodomus, a builder of prefabhomes for the upscale set.

Mr. Kolbe, an immigrant from Germanywho trained in Berlin, practiced in Englandand now teaches sustainable design as an

adjunct professor at Kent State University’sSchool of Architecture, knows the man-

ufactured home business in Europewell. He sold more than 200 suchhomes for German prefab home

makers Huff Haus and Baufritz over a20-year period.

In Europe, high energy efficiencyand quality workmanship from buildinghomes in a factory make these proper-ties prized by the wealthy. The Euro-

pean models are sleek glass boxes. To adaptto the U.S. market, Mrs. Kolbe, a co-founderand chief creative officer of Evodomus,which is in Cleveland Heights, said its designs maintain a modernist approachwhile using hip roofs and a variety of mate-rials besides glass to add warmth for Amer-ican buyers.

The Kolbes have three prospective pur-chasers of Evodomus homes, but no salesyet.

To produce the homes, Evodomus haspartnered with Bensonwood, a Walpole,N.H.-based producer of timber and high-efficiency homes made from prefabricatedpanels. A 2,000-square-foot home will costabout $500,000, not including the site cost.— Stan Bullard

Liabilities aplenty, assetsfew in this Chapter 11 case■ Cleveland Corporate Services Inc., whichstates on its website that it has served clientssuch as Progressive Corp. and Sherwin-Williams Co., has filed for Chapter 11 bank-ruptcy protection.

The Cleveland company estimated incourt documents filed Nov. 26, that it hasmore than 200 creditors and liabilities rang-ing from $10 million to $50 million. It listedits assets as less than $50,000.

The company designs conference roomsand sells and maintains audio/visual equip-ment, including interactive white boardsfrom Smart Technologies, for clients’ use.

Huntington National Bank, a securedcreditor, objected to Cleveland CorporateServices’ use of Phoenix Management Services of Chadds Ford, Pa., as its financialadviser during the bankruptcy process.

According to the bank’s objection, Hunt-ington lent $8 million to the company on orabout Dec. 23, 2011, and within threemonths, Cleveland Corporate Services hadbreached various covenants of the loans.Phoenix Management has provided “woe-fully inadequate financial projections,”Huntington asserted.

It is disagreements with Huntington thathave led to the Chapter 11 filing, said HarryW. Greenfield of Buckley King LPA, Cleve-land Corporate Services’ attorney.

“This is definitely a restructure,” Mr.Greenfield said. “We believe in the long runit is going to be a successful company andcase.” — Michelle Park

WHAT’S NEW

THE COMPANY: Polycase, AvonTHE PRODUCT: WH Series of hingedNEMA 4X electrical enclosures

Polycase says its new WH Series is madeto meet various specifications and require-ments of the National Electrical ManufacturersAssociation.

“The hinged cover allows for hassle-freeaccess to internal components and the gas-keted design makes the enclosures ideal foruse in a wide range of adverse conditions suchas wet, dirty and/or corrosive environments,”the company says.

There are five sizes of the enclosures,ranging from 5.11 x 3.93 x 2.75 inches to11.81 x 7.87 x 6.29 inches. There are threeversions offered for each size: a gray plasticenclosure for indoor use; a gray blendedplastic enclosure for outdoor use; and a grayblended plastic base with a clear cover foroutdoor use. The enclosures are priced aslow as $5.94 each.

Polycase has provided packaging productsto the electronics industry since 1951. Thecompany says it has more than 2,100 varia-tions of enclosures, from simple potting boxesto heavy-duty industrial electronic enclosures.

For information, visit www.Polycase.com.

Send details about new products to managingeditor Scott Suttell at [email protected].

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK NOVEMBER 26 - DECEMBER 2

We hardly knew you: Dr. John Brennanwon’t be coming to Cleveland, after all, to serveas president and CEO of the MetroHealth

System. Dr. Brennan, who today is CEO at Newark BethIsrael Medical Center in NewJersey, decided to remain inthe Garden State after he wasoffered expanded job respon-sibilities at Barnabas Health,Beth Israel’s parent health system. “The biggest impact is on our timetable, becausewe spent several months

working out the details of his contract,” saidTom McDonald, a MetroHealth trustee andchairman of the search committee. Dr. Brennanwas poised to earn an annual salary of $685,000— $135,000 more than his would-be predecessor,Mark Moran.

Let’s pause: American Greetings Corp. is taking a timeout on its plans to develop a newcorporate headquarters in an expansion ofCrocker Park in Westlake. The company said itsboard of directors believes it’s advisable to delaythe project temporarily in light of the proposedgo-private offer from Zev and Jeffrey Weiss, itsCEO and chief operating officer, respectively,and other members of the Weiss family. Thecompany said it “still intends to develop its newworld headquarters” at Crocker Park. AmericanGreetings expects the delay will be short and willhave no material adverse impact on the company.

Filling up: University Hospitals and PhilipsHealthcare will participate as tenants in the under-construction medical mart in downtownCleveland. The two organizations’ joint presenceat the medical mart, which is slated to open nextJuly, will be an extension of a $38.5 million partnership launched in 2010 where Philips’ latest health care imaging equipment wasbrought to UH Case Medical Center for furtherdevelopment. The space occupied by the healthsystem and Philips will anchor the third floor ofthe medical mart. The two organizations willwork together to highlight innovative imagingtechnology in use and under development byPhilips.

In control: FirstEnergy Corp. plans to spend$45 million to build an environmentally friendlytransmission control center in Akron. The electric company said the control center will be built at its West Akron Complex, an existing150-acre site that already houses an Ohio Edisonservice center, a FirstEnergy call center and alarge office building where several companysubsidiaries are based. Groundbreaking for the70,000-square-foot Akron Control Center, as itwill be known, is expected in spring 2013.

Seeing the light: GE Lighting, the unit ofGeneral Electric Co. based at Nela Park in EastCleveland, agreed to acquire Albeo TechnologiesInc., a privately held maker of LED fixtures basedin Boulder, Colo. GE Lighting did not say what itwill pay for Albeo, which was established in2004. Albeo’s LED systems include high-bay,low-bay, linear, surface mount and under cabinetfixtures that are used in commercial, industrialand institutional settings.

End of a long run: After eight years of leading First Federal Lakewood and nearly threedecades altogether with the bank, president andCEO Gary R. Fix will retire Dec. 31 and will besucceeded by Thomas J. Fraser, who’s currentlyexecutive vice president and chief operating officer. Mr. Fix, CEO since 2005, will continue toserve on First Federal’s board of directors. Mr.Fraser, who joined the company in 2007 and wasappointed to the board last June, becomes pres-ident and CEO on Jan. 1.

BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

Feds set to take inthe sites of Cleveland■ The U.S. Environmental ProtectionAgency is re-examining more than 460former lead factory sites across thecountry — including some in Cleve-land — for health hazards left bytoxic fallout onto soil in nearbyneighborhoods, according toUSA Today.

The effort, a result of a USAToday investigation earlierthis year, “involves locationsin dozens of states and has already identifiedseveral sites needing further investigationand some so dangerous that cleanups arebeing scheduled, according to records andinterviews with state regulators,” the news-paper reported.

In Cleveland, “three sites are beinglooked at for possible cleanups and ‘several’more have risks needing deeper investiga-tion,” according to USA Today.

Looking for a house?Plenty of options available■ Cleveland’s housing market is showingsome signs of improvement, but it remainsvexed by an unflattering distinction: It’samong the country’s top 10 markets for vacant homes.

Website 247WallSt.com noted the Cleve-land market ranks No. 8 nationwide, with6.2% vacancy. Here’s the description ofCleveland’s situation:

“Unlike metropolitan areas in Floridaand Nevada, the housing-market crash wasnot that bad in Ohio. In Cleveland, the pricedrop from peak to trough was 17.6%, a farmore modest decline than that of such

cities as Las Vegas. Despite faring betterthan many markets, Cleveland is not yetshowing many signs of turning a corner. Ontop of high vacancy rates, the average priceper square foot is unchanged from a yearago, while the number of sales has droppedby nearly 20%.

“Further, while 1,754 resales and newhomes are for sale in Cleveland, per

Trulia’s site, another 5,451 homes arein some phase of the foreclosure

process.”To put things in perspective,

though, the city with the worst vacancy problem — Detroit —has a rate nearly twice that ofCleveland, at 12.3%.

Other Ohio cities on the listare Toledo (No. 7, 6.5%) and Dayton (No. 6,6.6%).

Cleveland museum has an artful achievement■ A book based on an exhibition at theCleveland Museum of Art landed on a New York Times list of the best art books of2012.

“Wari: Lords of the Ancient Andes” wasproduced in conjunction with a show of thesame title running through Jan. 6 at theCleveland museum. (The exhibition willtravel next year to the Museum of Art/FortLauderdale in Florida and the Kimbell ArtMuseum in Fort Worth.)

“Overseen by Susan E. Bergh, organizer ofthe exhibition and a curator at the Clevelandmuseum, this lavishly illustrated, oftenbreathtakingly beautiful book pulls togetheressays by more than a dozen scholars,” TheTimes said.

“Historical and geographical contexts aredetailed, and there are essays covering architecture, religious deities and rituals,textiles and feather work, sculpture, and inlaid and metal ornaments.”


Brennan




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